Inquiries

An inquiry is a request to view your credit file. Inquiries can be made by the individual, by their creditors, by prospective lenders, employers, landlords, and even insurance companies. Inquiries are one of the least understood aspects of a consumer credit report, yet they can affect your credit score. Inquiries are divided into two categories: hard inquiries and soft inquiries.

Hard inquiries occur when you authorize a third party to check your credit. They frequently represent attempts to obtain additional debt. Also included are credit checks by leasing companies. These inquiries remain on your credit profile for 2 years. One inquiry may not necessarily reduce your credit score, and if it does, it will likely drop it only up to 5 points. Multiple inquiries in a short period of time can be viewed as attempts to obtain substantial debt. Lenders could view this as a sign that you are having income disruptions or substantial emergency expenses. Several inquiries back-to-back can have a greater impact on your credit score. There are a couple of exceptions:

Automobile loan and home mortgage purchases involve larger amounts of money where the consumer is smart to shop around for the best interest rate. Credit bureaus recognize this healthy behavior and make an allowance for it in the formulas that calculate your credit scores. Generally speaking, inquiries made for a home mortgage within a 30-day period are counted as only one inquiry. Automobile loan inquiries made within a 14-day period are similarly counted as only one inquiry. Newer versions of FICO based scoring allow for up to 45 days for both types of loan inquiries to be counted as just one inquiry. Different bureaus use different versions of the FICO based scoring model, so this can vary depending on which credit scoring product is examined.

Soft inquiries reflect passive credit checks. If you pull your own credit report, either directly from the credit bureau for a fee or using the free credit report service, this has no impact on your credit score. It may appear as an "identity" inquiry. Solicitors that purchase your credit file as part of a list from a credit bureau will show up as promotional inquiries which are a type of soft inquiry. Your current lenders that periodically check your credit to monitor your credit health are also a type of soft inquiry. These appear as account review inquiries. None of these inquiries have any impact on your credit score, and they are grouped separately on your credit report from the hard inquiries described above.

Credit checks initiated by employers and landlords also fall under the soft inquiry category. Even credit checks made as a part of insurance applications to not affect your FICO scores.

Inquiries are a record of who is viewing your credit report, and it is limited only to those who have a permissible purpose to view your file. Legitimate businesses must register to have access to your credit report. You can view your own report once you confirm your identity.

We do not yet have enough information to report on the impact of inquiries on the new VantageScores that will be used by credit bureaus. It is likely that these guidelines will remain relatively unchanged.

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