How Credit Report Inquiries Affect a Credit Score

When a creditor pulls a credit report, this is called an “inquiry.” Inquiries lower credit scores because research has shown that a search for new credit can mean greater credit risk. Here are a few good tips to know about inquiries:

  • Inquiries usually have a small impact. For most people, one additional credit inquiry will take less than five points off of their FICO score.
  • Inquiries have a greater impact if one has only a few accounts or a short credit history.
  • A large number of inquiries equals greater risk. People with six or more recent inquiries are up to eight times more likely to declare bankruptcy than people with no recent inquiries on their reports.
  • Many kinds of inquiries are ignored and don’t deduct points off of a score. Someone ordering their own credit report, an employer ordering a report, or a creditor pre-approving an existing customer are all examples.
  • The score allows for “rate shopping” as the model distinguishes between autonomous inquiries and like-kind inquiries. All inquiries from the same industry count as only one inquiry for 45 days. Thus, someone shopping for a car or a mortgage does not have to worry about multiple creditors pulling credit reports during this window.

From myFICO’s “Understanding Your FICO Score” booklet

November 19, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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