Growth & Jobs | Credit experts urge caution: Too many loan queries can lower your credit score

Credit experts are advising Jamaicans to be cautious when applying for loans, warning that too many credit inquiries can lower their credit scores and affect their ability to access future financing.

“The only inquiry that impacts your credit score is a ‘hard inquiry’, the one conducted by a financial institution when you apply for credit,” explained Keith Parkes, business development manager at CRIF Information Bureau Jamaica, during a recent discussion on smarter credit use.

“When you check your own credit score, that’s considered a ‘soft inquiry’, and it does not affect your score,” he clarified.

Parkes was speaking at the Smarter Credit Workshop, hosted by the JN Financial Academy, an initiative of the JN Foundation, as part of its ongoing efforts to build financial literacy, empower Jamaicans to make smarter money decisions and to educate how to maintain a healthy credit score.

He explained that hard inquiries from banks and other credit providers appear on your credit report and help lenders assess how actively you have been seeking new credit.

“Even dormant or closed accounts tell a story,“ he noted. “Lenders look at how you managed those debts because past payment behaviour remains one of the best predictors of future financial responsibility.”

Parkes urged consumers to be proactive by reviewing their credit reports before submitting any loan or credit card applications to ensure the information is accurate.

“You want to pull your report early to spot and dispute any errors,” he advised. “When institutions see discrepancies, it can slow down or even derail the approval process.”

Janice Knight Chung, sales and marketing officer at EveryData Jamaica, also encouraged consumers to use the proper channels to correct errors.

“While you may be tempted to go back to the institution that reported the information to the Bureau, the most effective way is to file a dispute directly with the credit bureau from which the potential lender accessed your credit report,” she explained. “We have systems in place to manage this process. This includes steps to ensure the responsible institution investigates and corrects the information (if needed).”

She added that most disputes are resolved within 14 calendar days, with consumers being notified if additional time is required.

When asked what determines credit scores in Jamaica, both experts pointed to payment history, credit utilisation, types of credit used, and responsible borrowing habits as key factors. Paying debts on time, keeping credit utilisation low, and making payments on time and above the minimum were all cited as some of the smart practices for maintaining a healthy credit profile.

“Smart borrowing decisions are critical,” Knight Chung emphasised. “Just because you qualify for a high credit limit doesn’t mean you should use it. Think carefully about your repayment ability and your actual needs before taking on debt.”

The experts explained that each credit bureau uses its own scoring model, giving different weight and risk grades. However, although they may vary, some credit products will generally be more influential than others across all bureaus, for example, installment or term loans such as mortgages will carry more influence than a credit card.

“The closer your score is to the higher end of the scale, the better,” Parkes added. “While scores may vary between bureaus, they all reflect one principle – consistent, responsible financial behaviour over time.”

Both experts also cautioned against co-signing loans frivolously, noting that co-signers are equally responsible for repayment if the primary borrower defaults.

They reminded consumers that managing credit wisely begins with awareness. Regularly reviewing credit reports, disputing inaccuracies, and making informed borrowing decisions all contribute to building a stronger financial foundation and improving long-term financial health.