Written by Roland Bleyer and posted on August 19, 2010
When you authorise someone to review your credit file by applying for a line of credit (such as a loan or credit card), their enquiry is included in your credit file. But for how long? And do credit file enquiries really matter anyway?
Today let’s take a closer look at credit file enquiries that result from submitting credit card applications, and why you should be concerned.
How Long Enquiries Stay in Your Credit File
When you apply for a new credit card, the credit card company will make an enquiry. They do this so they can review your credit history there in your file to determine if you’re creditworthy or too much of a risk for them to approve you for a new credit card.
Each of these credit card application enquiries will stay in your credit file for five years.
Why Credit File Enquiries Matter
Who cares if someone else looked at your credit file to see if you were creditworthy? Who really cares if you recently applied for other credit cards? Well, future creditors do!
If a creditor sees a long list of recent enquiries showing that you applied for many credit cards recently, it gives the impression that you’re desperate for a line of credit — that you desperately need
the access to funds, and you probably don’t have the money to pay it back quickly. It makes you look like a bigger credit risk. That means you run a bigger risk of having your credit card application denied.
How to Avoid Too Many Enquiries on Your Credit File
The most important thing you can do is avoid frequently applying for credit. That includes balance transfers — don’t be a card-hopper who transfers balances by applying for a new card every few months. If you do, you’ll eventually dry up your appeal to new credit card companies and other lenders.
It’s important to regularly review your credit file even if you haven’t recently applied for credit though. Enquiries and applications you know you didn’t authorise could be an early sign that you’re a victim of identity theft. And if that’s the case, you might be able to stop it before too much debt is run up in your name, and you should be able to get those enquiries removed.
Don’t take anything in your credit file for granted. Credit card companies certainly won’t. Everything there helps to form the overall picture of your creditworthiness in their eyes. It’s up to you what kind of picture your credit file will paint. Fortunately you have a lot of control, and minimising credit applications is a good first step.