Many consumers are in a position where they have to improve their bad credit score otherwise they will have to continue to suffer under problems like the lack of access to credit or high interest rates on available lines of credit, but there are some aspects of bad credit repair that some consumers do not realize will be detrimental to their goal of improving their financial life. As one example, many consumers do not understand that credit inquiries can have an adverse affect on a consumer’s credit score and may open numerous credit card accounts thinking it will help them in their bad credit repair goals.
Some individuals believe that when a business submits an inquiry to check their credit report it will lower their credit score, but according to the Fair Isaac Corporation this is not necessarily true and consumers must understand the difference between certain credit inquiries. Despite the fact that there have been indications that in April and early May of 2011 consumers are still attempting to reduce the debts that they may have, there are still those who have practiced bad financial habits and are seeing their credit score drop at the present time, which necessitates intervention for their bad credit score.
Yet, some individuals feel that when they have a higher amount of credit available, versus a low amount of debt, this will reflect well on their financial situation, and there are some individuals who even opened new credit card accounts as a way to either consolidate debt or as a way to begin rebuilding their credit history, but this is not always a good option for those who are in a bad credit position and need help improving their score. When it comes to credit inquiries, those who open numerous credit card accounts or have inquiries that are related to an application for new credit may see their credit score dip as a result.
While it will depend on the severity of a consumer’s bad credit situation as to how much of a drop they will see, opening multiple credit cards for the purposes of bad credit repair or as a way to find more affordability when spending in a bad credit situation can be a bad idea for reasons that go beyond simple credit score reductions related to these types of inquiries. Understandably, consumers may be in a position where they can open a new credit card, despite having less than perfect credit, and consolidate debts at a more affordable rate, as erasing a consumer’s debt obligations is vital before the bad credit repair process even begins.
Consumers do need to remember, though, when it comes to inquiries related to applications for new credit, and this may be related to credit applications like those associated with traditional credit cards or even store credit cards, so they must take caution when opening new lines of credit. The reason for this is these credit inquiries could lower their score since it may be seen as a situation where a higher amount of credit risk is involved rather than consumers being in a position where their credit utilization ratio is much higher than before.