How Credit Inquiries Can Affect Your Credit Score
In the following article I will explain how credit report inquiries can lower your credit score. Depending on the type of inquiry, your score can lower 3 – 10 points -even more with multiple inquiries. While this should not be the pinnacle of your credit worries, it is helpful information to keep in mind.
What is an inquiry?
As the name suggests, a credit inquiry is the nomenclature used when anyone pulls your credit report for review. There are two main types of inquiries: inquiries that are only seen by you, and inquiries that are seen by everyone who reviews your credit report. Only the latter affects your credit score.
While multiple inquiries make a bigger impact on your credit score, multiple inquiries within the same 2-week period are usually only counted as one inquiry. The credit bureaus started doing this after customers started to complain that their scores were dropping 20 – 30 points in one weekend of car shopping (often when you are seeking financing for a new car, dealerships will make 20+ inquiries).
This brings forth an important tip: when you are seeking credit (filling out credit card applications, for example), do it in “bursts”. If you are going to apply for 5 credit cards, minimize the credit score impact by doing it all on the same day and then waiting a couple of months (if you have no success the first time) to do it again. Multiple credit inquiries indicates to credit bureaus that you are desperately in need of credit because you cannot honor your current obligations. This is why they lower your score.
Types of inquiries that do not affect your score
- Pulling your own credit report is not seen by anyone but you.
- Inquiries for pre-approval offers such as those “You’ve been pre-approved!” letters you get in the mail.
- SOME credit inquiries made by debt collectors.
Types of inquiries that do affect your score
- Inquiries made by creditors when you apply for credit.
- Inquiries made by cell phone companies when you apply for a cellphone.
- Car dealerships inquiries.
- Other misc. credit applications (such as a home loan).