How Cherry May Impact Your Credit Score

Wondering if using Cherry for your next purchase will impact your credit? Here’s a look at how this payment option could potentially influence your score through its application and repayment process.

1. Initial Application: When you first apply for Cherry financing, the platform typically performs a soft credit inquiry to check your eligibility. This initial step does not affect your credit score.
2. Loan Acceptance: Upon accepting a loan offer, some of Cherry's lending partners may conduct a hard credit inquiry. This is a standard step for new credit and can cause a small, temporary dip in your score.
3. New Account Reporting: The approved loan may be reported as a new installment loan on your credit report. This can diversify your credit mix, which is generally a positive factor for your overall credit health.
4. Payment History: This is the most crucial stage. Consistently making on-time payments can help build a positive credit history, while late or missed payments will likely be reported and can lower your score.

How Much Will Cherry Affect Your Credit Score?

Several factors determine how using Cherry financing might influence your credit score. Here are the key things to consider before you apply.

• Soft vs. Hard Inquiry: Applying for Cherry typically results in a soft credit check, which won't affect your score. Finalizing the loan, however, usually requires a hard inquiry that can cause a temporary, minor dip in your score.
• On-Time Payments: Consistently paying your Cherry installments on time can positively impact your credit history. This responsible payment behavior is reported to credit bureaus and can help build your credit over the long term.
• Credit Utilization: A new loan from Cherry increases your overall debt, which can affect your credit utilization ratio. This may temporarily lower your score, especially if you have other significant outstanding balances.

How You Can Avoid Cherry Affecting Your Credit Score

Make Timely Payments

The most crucial factor is paying each installment on time. Late payments are often reported to credit bureaus, which can negatively impact your credit score. Consider setting up automatic payments to ensure you never miss a due date and maintain a positive payment history.

Understand the Credit Inquiry

Cherry typically performs a soft credit check to pre-qualify you, which does not affect your score. Be aware that finalizing a loan may require a hard inquiry, which can cause a small, temporary dip in your score. Always review the terms before proceeding.

Choose the Right Card to Cherry

Improving your credit score is an achievable goal that can significantly impact your financial health, from loan terms to credit card approvals. With consistent, positive financial behaviors, you can use proven methods to boost your creditworthiness over time.

• Monitor your credit reports regularly. Obtain your free reports to identify and dispute any inaccuracies that could be harming your score and to track your progress.
• Establish automatic bill payments. Your payment history is the most significant factor in your score, so setting up automatic payments helps ensure you never miss a due date.
• Reduce your credit utilization ratio. Aim to keep your credit card balances below 30% of your total available credit to show lenders you can manage debt responsibly.
• Become an authorized user. Being added to a credit card account that has a strong payment history and low utilization can help improve your own credit profile.
• Diversify your credit mix. Lenders prefer to see that you can handle various types of credit, such as a mix of revolving credit (credit cards) and installment loans (auto loans, mortgages).
• Limit hard inquiries. Applying for too much new credit in a short period can temporarily lower your score, so it's best to space out your applications.

The Bottom Line

Applying for Cherry involves a soft credit check that won’t impact your score, but financing your purchase may result in a hard inquiry, which can have a temporary effect on your credit.

Frequently Asked Questions

Does applying for Cherry affect my credit score?

Applying for Cherry only requires a soft credit check to determine your eligibility, which does not impact your credit score. A hard inquiry only occurs if you proceed.

Will using a Cherry payment plan build my credit?

Cherry reports your payment history to major credit bureaus. Making consistent, on-time payments can positively influence your credit score and help you build a stronger credit history.

What happens to my credit if I miss a payment?

Missing a payment may lead to late fees. If payments become significantly delinquent, Cherry may report this to credit bureaus, which could negatively affect your credit score.