How to Apply for Credit Without Dropping My Credit Score
- 1). Verify the information in your credit report is correct. All lenders will look at your credit report before making a decision to grant credit to you, and you want to make sure they're looking at the right information. The Fair Credit Reporting Act entitles you to a free copy of your report from each agency every year; and they can be obtained from annualcreditreport.com (see Resources).
- 2). Pay off as much credit card debt as you can before applying. The Fair Isaac Corp. determines your credit score, and it advises customers to pay off credit card debt before applying for a new card to transfer it. The amount of debt you owe comprises 30 percent of your credit score, and lowering this amount will increase your credibility in the eyes of lenders.
- 3). Don't open or close too many other credit accounts before you apply. Opening too many accounts too quickly lowers your credit score, and closing them rapidly can reduce the average length of your credit accounts, which comprises 15 percent of your score.
- 4). Shop for credit products within a short time frame. The Fair Isaac Corp. makes a distinction between credit inquiries made over a short period of time and inquiries always being made for long durations. As a consumer you have a right to shop around for the best rates and doing so will not hurt your score. However, a borrower that is always looking for new credit accounts appears risky and can lower their score with such behavior.
- 5). Apply for a product once. Having too many new accounts at once lowers your score, and a high amount of applications will not increase your chances of being accepted. The Fair Credit Reporting Act entitles lenders to give you a disclosure if you are rejected outlining the reasons your application was not accepted. It's best to take note of these factors and work to improve them before applying again.
