Beware the “hard inquiry”

Beware the The credit score game can be quite confusing, and there always seems to be something that can knock your score down a few pegs. One thing to watch out for are "hard inquiries," which can be caused from some surprising actions.

AOL's WalletPop reports that these hard inquiries ultimately lower your score. Essentially, this is when an outside company requests your credit report. All three major credit bureaus see hard inquiries as a bad sign, presumably because it means you're requesting credit, which could mean you're stretched financially. Of course, there are some cases where this is absolutely not true, but your score will suffer anyways.

One situation that the news source warns about is at rental car companies. Apparently, if you use a debit card to reserve a vehicle, the company will pull your credit report as a means of ensuring you can pay off any damage you do to the car. The news source admits that this makes no sense – why not use a cash deposit, and why should a debit card affect credit? Yet this is the way things go, so be careful here, as your score could drop 10 points or more.

Another hard inquiry can be when you take on financing at a non-traditional lender. This includes things like shopping at a furniture store and taking out a loan to cover your purchase. These lenders typically charge higher interest rates than those that offer car loans and other mortgages, and thus are seen as "lenders of last resort" – something that can negatively affect your score.