Credit inquiries affect the credit bureau score
Credit inquiries have a negative impact on the score calculated by credit bureau. For this reason, condition requests have been introduced by the banks. Before taking out a loan, consumers should always compare banks’ current offers. This is the only way to find the cheapest loan. A credit request does not always have to be made immediately, alternatively a condition request is also possible.
What’s the difference?
The bank always carries out a credit check on a specific loan request. It is decided whether the requested loan is approved in the desired amount. In order to minimize the risk of default, credit bureau is informed in the course of the application process that the consumer has made a credit request. credit bureau stores all this data and uses it to determine the so-called credit bureau score.
Credit inquiries affect the score
The reported credit inquiries are saved at credit bureau with the “Credit inquiry” feature. As long as they are saved, banks can view them when querying credit bureau. In addition, the credit bureau score is negatively influenced by the credit inquiries beyond this period. credit bureau’s score is an assessment of a consumer’s solvency and thus its creditworthiness.
With many credit inquiries, banks assume that rejections have already occurred several times due to a lack of solvency. It is assumed that a consumer is trying to take out several loans at the same time, which means a higher risk of default. As the score decreases, the creditworthiness also decreases, which leads to higher interest rates or a rejection of the credit request.
Condition requests protect the creditworthiness
In order to avoid negative effects on the credit bureau score when comparing loans, the possibility of condition requests was introduced in 2005. In contrast to the loan request, these only apply as a request for the loan terms and not as specific loan offers. Condition requests are also saved by credit bureau, but deleted after 10 days.