Inquiries Effect on Credit Scoring

Inquiries Effect on Credit Scoring

Many people have heard before that inquiries lower the score.  As a result you may ask whether this is true or just a myth.  Inquiries definitely impact your credit score.

FICO score inquiries account for 10% of the total credit score.  FICO counts this to the part of their score that deals with the accumulation of new debt.

If you apply for a lot of credit within a short period of time, your scores will go down.  There is no set amount of drop per inquiry - it's bundles of inquiries in a short period of time that really impact the score, not just one single inquiry.

This means that when you apply for something and an inquiry is put on your  report, your score might not go down at all.  But if you start applying for a lot of new credit in a short period of time, these groupings of inquiries will have an impact on your score.

However, there are exceptions: mortgage or auto loans.  If you go to apply for a mortgage, all mortgage inquiries within a 2 week time period only count as 1 inquiry on your credit report. The same applies for auto loan inquiries.

The reason for this, is that the score providers understand that you will commonly shop around for the best terms on home and auto loans, and you shouldn’t be punished for doing this. Plus, in the auto business, it is common for your application to be sent to many different banks, which could also lower your scores, if FICO didn’t operate this way.

Accumulation of new credit or new inquiries on the report, accounts for 10% of the total credit score,  Insure you know about this, so you can minimize the amount of inquiries you put on your report further maximizing their scores. looks forward to helping you achieve your goals, and provide better opportunities for you and your family. Contact Us! We are standing by, ready to help!

Written By: Jim Rivette

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