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Wait a minute - does this mean that a person's
credit rating is lowered just by a bank
looking up their credit rating before
making a loan?


That sounds like having your grade point average
lowered if the college checks your grades
before admitting you.

Can anyone explain this?

If someone has "hard checks" and then no credit extended after the hard check, there is an indication that the credit was not extended becuase they were not credit worthy. Hence each "hard check" YOU inititiate for the purpose of extending credit lowers your score a few points. If you have a lot of checks over a short period of time it can have a short term large impact. Keep in mind that if you are shopping for a car or a home, and you are shopping rates (apply at several places), and then get a loan, all of those related checks count as ONE, not three, five, etc. etc. etc.

It is not a perfect system, but like so many other things in our country it works and probably as good as we can get it to work.
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