Credit Inquiries – How do they affect my scores?
Each time someone views a copy of your credit report, an inquiry is added to your record to indicate that it has been viewed. While some of these inquiries are completely harmless, others will lower your credit score.
Types of Inquiries
- Hard inquiry: A hard inquiry occurs when a potential lender pulls your credit report with your express permission. Because this type of inquiry indicates that you are trying to borrow money, it can count against your credit score.
- Soft inquiry: A soft inquiry occurs when someone who is not a potential lender pulls your credit report. For example, a soft inquiry may appear when an employer pulls your report or when you check your own credit. Soft inquiries appear on your report, but they won’t affect your score in any way.
Understanding the Effects of Inquiries
According to FICO, the effect a hard inquiry has on your score depends on a variety of factors, including the amount of time that has passed since the inquiry, the number of inquiries and other such information. For some people, a single inquiry will have no effect at all. For others, the credit score may decrease slightly. Hard inquiries will have a more dramatic effect on your score if you have other negative indicators on your credit report, such as a short credit history. Likewise, a large number of inquiries may be viewed as a sign of poor debt management.
TransUnion reports that most credit inquiries remain on your report for one year. However, some inquiries may remain for up to two years.
One of the most important credit tips you will hear involves finding the best interest rate for long-term loans, such as mortgages, student loans or car loans. If you are shopping for financing in one of these categories, it’s possible to apply for a loan from multiple lenders without incurring extra inquiries on your credit report. FICO reports that all hard inquiries made to finance an automobile, obtain a mortgage or take out a student loan within a 30-day period are typically counted as a single inquiry when your credit score is calculated.
In some cases, inquiries you did not solicit may appear on your credit report. Even though you did not approve these inquiries, they will still harm your score if they are not removed. For this reason, it is important to check your credit score regularly and use credit repair strategies to eliminate any inaccuracies. If you need help to repair credit problems, contact our office at 617-265-7900.