When a lender goes to a credit bureau to obtain an individual’s credit score, this is called a credit inquiry. It would be assumed that such an inquiry would have no effect on an individual’s credit score but just the opposite is true. Each time a credit inquiry is made on an individual’s line of credit, that individual’s score is reduced. Why is this? The system is designed so that people with bad credit are deterred from going from lender to lender and wasting the lender’s time when the individual already knows they probably will not be approved for a loan. By having this penalty in place, people are encouraged to make their loan inquiries count. However, many do not know this simple fact and are hurting themselves with each bank or lender from whom they attempt to secure a loan.

Shop Around

Those that have bad credit or borderline credit probably already know that they are not in as good a financial position as possible. However, this should not turn into desperation. Before even shopping for a new car, home, or other large purchase that would require a loan, talk to various lenders and find out what deals are available. This can be done online or over the phone. Be sure and never give out a social security number because once lenders have that in hand they almost always will run a credit inquiry which could end up putting another red mark on an already unstable line of credit.

Honest

Be upfront and honest with the loan officer but do not give them a bad luck story. Try to present negative information followed by a positive step in the right direction that has been taken. Go to a face to face interview after finding a lender that seems to reasonable with a credit report in hand. Be sure to darken all personal information so that the lender cannot perform a credit inquiry until they have given you good reason to believe approval is almost certain. After all, the credit report information itself should be enough for the lender to get a good feel as to whether they are willing to approve or not. After securing the right answers and feeling confident that an approval is in the future, give the lender the personal information requested such as name, social security number, etc. This is the best way to make sure that all inquiries into a line of credit count and that both lender and borrower come to an agreement that is suitable for both.