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Hard credit pull

If you want to successfully manage your business finances, you must manage your business credit. In order to do this, it is good to know how credit is calculated, what a soft versus hard credit pull is, and more. The following is a look at hard credit pulls, and what they mean for a business:

The first thing to know is that a hard credit pull only occurs when you apply for credit. However, your existing creditors can also do a hard credit pull whenever they feel like it. They may do it in conjunction with giving you a credit line increase, etc. They don't need your permission to do this. Why is that important to understand? Because a hard credit pull will have a negative effect on your overall credit score, although the effect is only slight.

The next thing to understand is that a hard credit pull shows up on your credit, whereas a soft pull does not. A hard pull will remain on your report for 2 years, but only impacts it negatively for one.In most cases, though it can be up to a year of adverse impact, it is typically only going to negatively impact for 90 days. And, to complicate matters a bit, if you have a higher credit score, and you have an inquiry, the drop is going to be greater. That kind of stinks, but that is just life.

The next thing to understand is that inquiries for the same thing will have the same impact, regardless of how many inquiries there are. So, if your business is looking for a retail location, and multiple sites do a hard credit pull on you, it will only count on your credit score as if one pulled your credit. Thus, it does not hurt you to have many do so. Of course, this is within a time frame. So, a mortgage inquiry window is 45-days. A vehicle loan inquiry window is 30-days. Thus, if you are going to look into these types of loans, it is best to have all the inquiries occur within the allotted window, for the least amount of damage to your credit.

If you are trying to maintain business credit, it is good to understand that unsecured credit inquiries like credit cards and in-store credit have the most adverse impact on score. Be careful about how many and which you apply for.

Why does any of this matter? Too many inquiries, despite how much credit is offered, or whether or not you actually take on the debt or credit can result in a loan application being turned down. This can be regardless of the strength of the loan application. Thus, be careful about how much credit you apply for, as the number of hard credit pulls you have in a set time period can adversely effect your chances for a loan.

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