How Do Credit Inquiries Affect Credit Scores?

Whenever a company or individual accesses your personal credit reports or scores, the credit reporting agency that fulfilled that request must, by law, record that “inquiry” on your credit report. Because certain inquiries have been found to be associated with greater credit risk, they may affect your credit scores. In other words, recent inquiries on your credit reports can cause your credit scores to drop.

There are a few important things to keep in mind regarding credit inquiries:

• The impact of a single inquiry is usually small, in the range of three to seven points or so. In addition, since most credit applications result in an inquiry into a single credit file with Equifax, Experian, or TransUnion, you aren’t likely to see your scores drop across the board.
• Not all inquiries affect your credit scores. “Soft inquiries” don’t affect your credit scores. Soft inquiries are generated when you:
  • check your own credit reports or scores;
  • file for a pre-approved credit offer;
  • make your reports available to current lenders to review your accounts; and
  • make your reports available for employment- or insurance-related inquiries.

It is “hard inquiries,” which are associated with applying for credit like a loan or a credit card, that may count.

• In certain scoring models, certain types of inquiries may be grouped together and counted as one. For example, within specific FICO scoring models, mortgage-, student loan-, or auto loan-related inquiries within a 15-day, 30-day, or 45-day window may count as a single inquiry. However, since you will not know in advance which credit scoring model a lender will use, it’s best to try to keep hard inquiries to a minimum, when possible.
• Inquiries are reported for two years. However, it’s important to note that, for the most part, only inquiries in the last 12 months count in calculating a credit score.
• It’s difficult to remove inquiries because the bureaus are required by law to disclose to you the name of any company that has requested your reports in the last two years. But if you are a fraud victim or someone pulls your credit reports without a legitimate and legal purpose, you can ask the credit reporting agency to remove or “suppress” the inquiry.

In addition to credit inquiries, credit checks include new accounts you have opened recently. Generally, new accounts are associated with higher risk, though if you manage them responsibly, their impact usually diminishes fairly quickly.

Some information on this page is adapted from content that originally appeared on Nav.com, a Venturize supporter.

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