When considering your credit score there are a lot of different criteria used to come up with your personal score. One of the items that can affect your credit score is inquiries. An inquiry is when you allow a lender to inquire about a copy of your credit report.
When you are looking at your credit report you may notice a section that includes inquiries. You may also see a list of companies that have inquired about your credit report that you do not know. However, the only inquiries that will count against your credit score are those that are used for an application for new credit.
Research has shown that when a person opens up several credit card accounts in a short amount of time, they tend to have a higher credit risk. If the information on your credit report shows that you have opened up several new credit lines in a short amount of time, your FICO score may drop as a result.
The impact of a credit inquiry will impact each person differently based on their own unique credit history. Generally speaking, a credit inquiry will only have a small impact on someone’s credit score. For most individuals, a single credit inquiry will result in less than five points being taken from their credit score.
The impact of an inquiry can have a larger impact on individuals that have a short credit history or only have a few accounts. A larger number of inquiries also implies a greater risk, which can result in a lower score.
Research shows that not all inquiries are treated equally when it comes to affecting your credit score. Loans that often involve rate shopping such as a student loan, mortgage, or car loan are treated differently. Typically, FICO provides a 30 day window for rate shopping before these types of inquiries have an effect on your credit score.
It is important to keep your credit score in good standing for many reasons. The most important reason is that your credit score can affect your ability to borrow money, get a job, and even rent an apartment.
To keep your credit score up, make sure that you are paying all of your bills on time and that you keep your balances on credit cards low.
While a credit inquiry can negatively impact your credit score, in most cases the effect that it will have on your score will be quite minimal. If you are shopping for a loan, make sure that you understand that each of the companies you are considering will conduct a credit check. It is important to make sure that you complete your loan shopping in a reasonable amount of time or it could impact your score.