Your credit can unlock the door to homeownership. Knowledge is power and can help you learn to use credit to your advantage. Here are some answers to your most pressing credit questions. 

Do inquiries affect my credit score? 

Some inquiries do.   

First it’s important to know that there are two different types of inquiries. Hard inquiries are those made by creditors when you are applying for credit. Soft inquiries occur when someone checks your credit for reasons other than to extend new credit. 

When it comes to hard inquiries, creditors will pull your credit report to help them make a decision about whether or not they will extend credit to you. When they make one of these inquiries, it goes on your credit report and can cause your credit score to drop. Hard inquiries can stay on your credit report for up to two years.  

Soft inquiries, on the other hand, have no impact on your credit score. Some examples of soft inquiries include: 

    • A potential employer checking your credit before hiring you 
    • A credit issuer checking your credit before making a promotional offer 
    • You checking your credit

Since hard inquiries can lower your credit score, it is wise to only apply for credit when you need it. If you are planning to buy a house in the near future, it may be a good idea to put off applying for new credit such as a credit card until after you become a homeowner if you can help it. That way, you don’t risk a drop in your credit score right before you apply for a mortgage.    

How long do late payments stay on my credit report?  

If you forget to make a bill payment on time and it’s reported to the credit bureaus, that late payment can stay on your credit report for up to seven years. Not only that, but it can lower your credit score. Late payments are one of the biggest factors used to determine your score.   

If you pay your bills late because you forget to pay them on time or you are disorganized, you can make it easier on yourself by signing up for automatic bill payments. That way, you don’t have to think about making payments, and the payments will always be made on time. 

If you do pay a bill late, try contacting the creditor to explain. Ask them if they can give you a break by not reporting the late payment to the credit bureaus. While they might say ‘no,’ there’s a chance they will say ‘yes.’   

How long do collections stay on my credit report?  

Collections show up on your credit report when you’ve failed to pay a bill and the account goes into default.  At this point, the bill has been turned over to bill collectors to get the money back. If you default on a bill that’s considered a major red flag to creditors. As a result, collections on your credit report could lower your score. 

It’s also important to know that collections can have a long-term effect on your credit. Like late payments, collections can stay on your credit report for up to seven years.   

If you can’t pay a bill and you think it’s about to go into collections, reach out to the creditor and see if you can work out a payment plan with them. Even if you can’t pay the entire bill right away, you may be able to make smaller payments to avoid having the bill go into collections.   

How do I get a free credit report?  

Did you know there could be mistakes on your credit report? If there are mistakes on your credit report, they could lower your score.  

For that reason, it’s a good idea to get a copy of your credit report at least once a year so you can see what’s on it and make sure there’s nothing on it that shouldn’t be on it.   

The good news is you can get a copy of your credit report for free by simply going to In fact, as long as the COVID-19 pandemic is ongoing, the three credit bureaus Equifax, Experian, and TransUnion are all allowing you to get a free copy of your credit report every week.  

What is a secured credit card?  

If you’re trying to rebuild credit or trying to establish credit for the first time, a secured credit card can be an invaluable tool to use.   

A secured credit card is a card that requires a deposit. Your credit limit would then be the amount of the deposit. For example, if you put down a $300 deposit on the credit card, you would be able to charge up to $300 in purchases on the secured credit card. If you close the secured card, you can typically get your deposit back as long as you don’t still have a balance on the card.  

Secured credit cards allow you to show lenders that you can use credit responsibly. Over time, a creditor may then decide to issue you a traditional credit card that does not require you to make a deposit.   

What is some advice for improving my credit?  

One of the best things you can do to improve your credit is pay your bills on time. An easy way to make sure that gets done is to automate your bill payments.   

Paying down debt is another action you can take to improve your credit. It’s best to use no more than 30 percent of your available credit so if you have $10,000 in available credit, you would want to use no more than $3,000. 

A potentially easy way to improve your credit is to check your credit report. There could be a mistake on your credit report that is bringing your credit score down. By alerting the credit bureaus of such a mistake and letting them take it off your credit report, you may pave the way for your credit score to rise a few points.   

Your credit can be a powerful tool if you know how to use it. By taking the time to learn some credit basics, you take major steps in making your credit work for you.