Credit Inquiries

Credit InquiriesCredit Inquiries are made by organizations asking to view your credit information.

Your “Inquiry Information” section of your credit report lists all parties that have inquired about your credit information in the past two years.

Every time an organization asks (or inquires) a credit bureau about your credit information – en entry noting it is made on your credit report.

Many financial organizations inquire about your credit information. These may be Credit Card Companies, Banks, Lenders, Insurance Companies, the Government, Employers, Your Self and many more.

Not all credit report inquiries are equal, and not all impact your credit score.

Credit Inquiries FAQ

Are all inquiries equal?
As far as FICO score goes, credit inquiries are classified as either “Hard inquiries” or “Soft Inquiries“.

Hard inquiry is made when you apply for new credit, and the creditor inquires about your credit information

Soft inquiry is made every time someone inquires about your credit information not for the purpose mentioned above.

Do credit inquiries impact my credit score?
First – credit report inquiries account for only 10% of your credit score.
Second – Only “Hard inquiries” affect your credit score. “Soft inquiries” have no impact on your credit score.

After about 6 months all inquires have minimal impact on your score. After a year they are no longer considered in your credit score at all. However, they will continue to appear on your credit report for a total of 2 years.

For most people, one additional credit inquiry will take less than five points off their FICO score. Inquiries can have a greater impact if you have a “thin file”, i.e. only few accounts or a short credit history.

Large numbers of inquiries also mean greater risk. Statistically, people with six or more hard inquiries on their credit reports are up to 8 times more likely to declare bankruptcy than people with no inquiries on their reports.

Does everyone can see all my credit inquiries?
While your version of the credit report lists all inquiries, both “hard” and “soft”, the institutions that inquire about your credit information will have only “hard” inquiries showing on their version of your credit report.

So what happens when I do rate shopping? Will my score go down?
When you’re shopping around for mortgage and auto loans, you want to get the best rate – and you should.

There is no need to worry that having your credit checked by several lenders would hurt your credit score.

This is because most credit score allow for rate shopping by either considering all as a single inquiry, or by not considering at all any inquiry made in the last 30 days.

FICO score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping.

In addition, the FICO score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score.

The older FICO formula allows for a 14-day span, while the newer formula allow for a 45-day span. This means that all mortgage, auto, and student loan inquiries made within this 14/45 day span will count as a single hard inquiry.

Should I trouble myself with removing credit inquiries?
For most people – credit inquiries have a very small impact on their credit score, and zero impact after a year. It may not be worth your time to try and remove unauthorized credit inquiries, but if you’re not willing to wait, you can find more information about removing credit inquiries here.

Many people tend to over focus on removing inquiries when their reports are full late payments, collection accounts or even a bankruptcy. In these cases, you should focus on removing some of the bigger problems on your credit report.

What inquiries CAN be removed?
Valid hard inquiries – which are inquiries authorized by you can NOT be removed from your credit report. Only hard inquiries that were not authorized by you can be removed.

Any more tips about inquiries?
In general you should only apply for credit when you need it, and one or two every few months have minimal impact on your credit score.

Here are some additional topics:

Hard Inquiry – A short discussion on hard inquiries, how they are made and how they affect your FICO score.

Soft inquiry – A short discussion on all the other types of inquiries and how they are made.

Removing Credit inquiries – A step by step guide for credit report inquiries removal.

Credit Inquiry Dispute Letter – A sample letter that you can send to unauthorized inquirers, demanding to remove their inquiries from your credit report.

Credit Report Inquiries – How many are “Too many”? When will your Fico score be impacted?

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