Let’s take a look at a common scenario…
You’re at the checkout line of your favorite hardware store, the total comes out to $95. The friendly cashier at the counter smiles at you and asks if you’d like to sign up for a store credit card, you’ll get $50 off your purchase, you can even pay it today and not have to worry about it. You think to yourself, “WOW Great Deal! That’s like getting 50% off,” and proceed to sign up. But what many consumers don’t know, is that when you just signed up for that credit card, even though you paid it off, you put a hard inquiry on your credit report, which may impact your credit score and will show up on your credit report.
A hard inquiry occurs whenever you apply for a new credit, which includes those in-store credit cards that shopping places love to push at us. This is considered a voluntary inquiry for an application for credit by FICO and will affect your credit score.
This also includes those mail offers with flashy headlines like “Pre-Approved Credit Card.”
FICO does not give exact numbers on the impact of credit inquiries, it does negatively impact your credit, and they do state, “FICO’s research shows that opening several credit accounts in a short period of time represents greater credit risk.” So while opening one may not impact your score greatly, opening credit cards at all your favorite stores to save a few bucks may end up costing you in the long run.
This article is not meant as legal advice, and Bankruptcy is very complicated depending on every persons overall financial situation. So, if you are considering any chapter of the bankruptcy code, is it called one of our attorneys for a free, same day consultation.
To learn more about Chapter 7 or Chapter 13 Bankruptcy, the federal government has excellent information about it on their website at http://www.uscourts.gov/services-forms/bankruptcy
Fairmax Law™ is a Service of Jaafar Law Group PLLC and is a designated debt relief agency that helps clients file bankruptcy under the federal bankruptcy code.