Whether it’s a date, job application, credit card application or mortgage, nobody likes being turned down. It’s even worse when you don’t know how much damage the denial can cause. Though it’s not much of a silver lining, the good news is that a credit denial, by itself, won’t cause additional damage to your credit score.
Denial Doesn’t MatterFor credit scoring purposes, it doesn’t matter whether your application for credit gets approved or denied. In fact, your credit report won’t even reveal the result of your application – just that you applied for credit. Of course, if you’re approved for a credit card, for example, your credit report will soon show that you have a new credit card. But if your credit report doesn’t show a new credit card, no one can tell whether you were rejected or were accepted but, for whatever reason, you decided not to pursue it.
But the Inquiry Does CountWhether you’re denied or accepted, when you apply for new credit your credit report will show a ” hard inquiry.” A hard inquiry, which means that a potential creditor checked your credit, may lower your credit score. When you apply for new credit, you’re attempting to add to your existing debt or at least your potential debt through a new line of credit. As a result, you could be seen as a riskier borrower for future credit because it may be harder for you to pay off what you owe. In addition, that inquiry could result in additional debt that isn’t appearing on your credit report yet.
Length of ImpactCredit inquiries remain on your credit report for about two years after the creditor pulls your credit report. But, as the inquiries age, they have a smaller impact on your credit score says Experian’s Maxine Sweet. For example, your score will be hurt less by a mortgage you applied for 18 months ago than a credit card you applied for last week. After about two years, the inquiries should fall off your credit report altogether. You can calculate how long each hard inquiry will remain on your report when you check your credit report and view the date the inquiry was placed on your report.
No Credit Card Required
About the Author
Mark Kennan is a freelance writer specializing in finance-related topics. He has worked as a sports editor and published articles on a number of online outlets.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2014 ConsumerInfo.com, Inc. All rights reserved.