May 2014 – Regarding obtaining new credit (part 2 – finding and opening a new account)…
You can search for various revolving accounts, both secured and unsecured, online at various sites such as www.credit.com to get an idea of what type of card you may be interested in and who you may wish to open one with. We have also had a number of clients who, in the past, have spoken highly of the secured credit options with www.orchardbank.com online. Another recommendation for either secured or unsecured credit options is to check with your bank, credit union, or any lender you’ve had good experiences with in the past. Having a good rapport with you credit card company and knowing they have been supportive to you as a consumer in the past is very helpful in keeping credit good going forward. If an issue arises you want to be working with someone who’s likely to resolve it promptly.
Keep in mind that every time you give a company information about yourself they are likely to check your credit in order to answer further questions about opening an account. Every time your credit is checked there is a new hard inquiry added to your credit files. It is ideal if you only have two hard inquiries per year, but no more than one every three months at the most. One or two inquiries will not impact your scores, but when you begin to have them too frequently you can see your credit score with all 3 credit bureaus (Equifax, Experian and TransUnion) change about 5 points per inquiry. So as a general rule of thumb, only apply for credit when needed and try to plan your credit checks so they are spread out.
Some lenders, but primarily auto dealers, will shop around for the best interest rates. This can easily add 10 to 20 new inquiries all at once. Technically, this is supposed to factor into your credit scores as one credit check, but we often see them calculate as each separate inquiries. So be extra cautious if you ever have credit checked for an auto loan. You can request they limit the number of sources they check (though they may not always end up doing so), or you can go to a trusted lender and have credit checked once so you are pre-approved before ever going to the dealer.