 TITLE: How Applying for Credit Impacts Your Credit Score CONTENT: What Happens to Your Score When You Apply for Credit?\n-----------------------------------------------------\nWhen you apply for a new credit account, you'll authorize the lender to view one or more of your credit reports. This is necessary nearly anytime you apply for a loan, as the lender will need to examine your credit history to determine your creditworthiness. When the lender requests your credit report for the purpose of evaluating a loan application, it's often referred to as a \"hard inquiry\" or a \"hard pull.\"\nEach hard inquiry gets added to your credit report and can have an effect on your credit score. That's because credit scoring models can interpret multiple new inquiries as a sign of possible financial trouble. For example, some people may apply for many new lines of credit when they are having trouble paying their bills or because they are spending more than they can afford.\nThankfully, the credit scoring models consider multiple inquiries in a short period for certain types of loans, such as auto loans and home mortgages, as rate shopping, and will consider them as just a single inquiry. This is to prevent your credit score from suffering when you are really just shopping for the best rate on a single loan.\nHard inquiries are just one of many factors that make up your credit score. With the FICO® Score☉ model commonly used by lenders, your payment history counts for 35% of your score, and your credit utilization, or how much of your available credit you're using, is another 30%. Your length of credit history makes up 15% of your FICO® Score, while your credit mix, or the different types of credit products you have, makes up 10% The number of recent inquiries on your credit report counts for 10% of your credit score, making it a relatively minor factor. Therefore, paying your bills on time and carrying a low amount of debt will be far more important to your credit score than your recent inquiries.\nSoft inquiries, or soft pulls, occur when you view your own credit report or a lender or credit card issuer views your report to preapprove you for a financial product. Insurance companies can also request soft inquiries when approving you for insurance. But regardless of the source of the soft inquiry, it will never affect your credit score. For more information, see \"Hard vs. Soft Inquiries on Your Credit Report,\" END