The Truth Behind Credit Inquiries

Inquires into your credit history account for 10% of your total credit score.  Every time your report is requested by a lender in the credit application process, the respective credit bureau records the request as an inquiry on your credit history. 

Anytime you view your own report, it might be surprising to discover that there are companies that have requested your report to which you have never submitted an application for credit.  Or worse, companies you have never even heard of.  However, those type of inquires do not negatively impact your score.  

Only inquires that result from applications that you have submitted for credit count towards your score.  These inquires will occur anytime you apply for credit cards, a mortgage, an auto loan, or any other form of credit.  An inquiry is categorized as voluntary if it was initiated because you applied for credit.  Only voluntary inquiries have a negative impact on your score.           

It is possible for other types of inquires to appear on your report that do not impact your score at all.  They are inquiries initiated from the following sources:  lenders with whom you already have an account, companies sending pre-approved offers, prospective employers, and anytime you request your personal credit report.  When you examine your personal credit report, you have the privilege to view every type of inquiry recorded, not just the ones used to calculate your score.  If you happen to see an inquiry from a lender and you did not request credit from them, then chances are that particular inquiry is not being used in the calculation of your score.      

Some people will not shop around for a mortgage or car loan because they believe it will damage their credit score by listing too many inquires on their report.  However, so long as the comparison shopping is done within the time frame of 45 days, additional inquiries will not hurt your score.  All inquiries that are made in that time frame count only as one inquiry by the formula used to calculate your score.  It is important to note that a slightly older credit scoring formula is still in use by some lenders which reduces that time frame to be only 14 days. 

It is also a misconception that your score will always decrease anytime you initiate an inquiry by submitting an application for credit.  For someone with an established credit history that has a variety of different credit accounts, it probably won’t decrease, or very little if it does.  Multiple inquires generally only affect people with little to no credit history or those with only a small number of accounts.     

Even though credit inquires stay on your report for a span of two years, the ones made in the last six months carry the most weight for the inquiry section.  As mentioned previously, the inquiry section does only count for 10% of your total credit score.  Therefore additional inquires will not greatly decrease your score when they do occur.