FICO scores (credit scores by Fair, and Isaac and Company) are designed with algorithms that watch for someone with tendencies to apply often for credit. The scoring systems assumes that this person is likely to obtain too much credit, over spend, and ultimately default on their credit and not repay it. So as a consequence, FICO will lower your FICO score if this is the case.
To avoid this happening to you, do this:
- Avoid applying for too many credit cards in general, and especially often. You should have a max of 1 to 3 cards, if you use credit.
- Apply for credit, whether it be credit cards, an auto loan, or a mortgage, all within a 14 day window. This, according to FICO, looks more like someone who is planning on acquiring credit and is currently shopping around for lenders. Again, this is different than applying for credit a couple of times per month, for example, which appears more risky in the eyes of FICO for would-be lenders.
- When you go to sites like www.AnnualCreditReport.com, a free site that allows you to get your yearly credit report (you are entitled to at least one free credit report per year). Getting your credit report here, although creating an inquiry, will not hurt your FICO score since you are not applying for credit. You are just checking your scores and reports which, by federal law, you are entitled to do.
Doing the above will lower, if not eliminate, the lowering of your FICO scores. You may also want to check and dispute any inquiries that are currently reporting on your reports, as doing so, will raise your FICO scores per inquiry removed.
Best wishes always,
Russell & Diana de la Peña
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