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Credit Shopping and your Credit Score

By Karen Anderson
Published: Thursday, December 31st, 2009

The idea of credit shopping is an over used shopping style that is used by many to decrease their utilization measurement in the hope of increasing their credit score and having a better credit report. However, over shopping for credit is also bad because of its long term potential detriments to the overall credit worthiness of the individual. Borrowers and credit reports recipients should avoid over doing the credit report tips on decreasing utilization.

The tips prescribe to lessen utilization by paying the bills and not by applying for more credits that will let you gain more credit limits which will further decrease the utilization since it is the ratio of balance and the credit limit. Credit report tips can be wrongly analyzed by those who refer to it, borrowers should learn to balance the prescriptions and the actual applications of these tips.

Shopping for more credits is the usual tendency of misadvised individuals that wish to decrease their utilization measurements. However by trying to decrease their utilization measurement they increase the numbers of their credit accounts. By doing so, they increase the denominator of the balance credit over credit limit formula. There is a negative effect caused by this action, the individuals who engage in such credit tactic unknowingly implicate more damages than good to their own credit worthiness.

Credit report tips would tell any borrower that increasing their credit limit is not the answer to their utilization problem. The real problem of over utilization should not be compounded with credit over shopping.

Shopping for a credit account is an automatic wavering of the confidentiality of someone’s credit report and score. The applicant has to disclose any information that the credit companies interpret as relevant and necessary to the approval or acceptance of the credit application. Given this nature, credit report tips by reliable credit repair companies will prescribe avoiding the “inquiries” of these companies. Inquiries are the actual getting of the personal information of the borrowers by the lending financing companies to the credit bureaus.

This information would include the credit reports and credit scores of the borrower for at least the last seven years. It can be said that increasing the required inquiries on your account makes your personal information more open to other lending companies and even to those who have wrong intentions on your personal information.

Statistics is the basis of the credit report tips that stress on the unnecessary option of over applying for credit accounts. Shopping for many credit accounts as said before increases the inquiries on the borrower. Statistics shows that individuals with many inquiries are directly correlated to individuals with higher credit risks. This statistical data is also the basis used by both credit companies and credit bureaus in adjusting the credit score and credit report of an individual.

Over shopping for credit therefore, does not only increases the numbers of people who use your personal information; it also make the borrower appear to be as riskier credit holders which may force the lending companies to close his or her existing credit accounts or reject the credit application.

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