Every time you apply for credit and the credit grantor checks your credit report, a credit inquiry is placed on your file. Even if you receive a credit offer in the mail and you respond, your credit will almost certainly be checked and a credit inquiry will be added to your credit report.It’s important not to apply for too many types of loans at one time. However, if you are shopping around for one type of loan, like a mortgage, and decide to apply for several different loans, the inquiries will count as 1 towards your credit score. The same goes for credit cards and auto loans. These multiple inquiries do not affect the credit score as long as they occur within a 30-45 day period.
How Important is it to Remove Inquiries?
Inquiries are the least important items to remove from your credit report. They affect your credit score the least and actually affect it less and less until they finally fall off in 2 years. Having them removed from your credit reports should be your last priority in your quest to increase your credit scores.
Types of Credit Inquiries
- Hard Inquires - The type of inquiry that negatively affects your credit score. When you complete an application online, over the phone or in person granting a lender permission to pull your credit report in hopes of obtaining a loan of some sort, this is a hard inquiry. This type of inquiry applies to credit cards, lines of credit, car loans, home loans, private student loan, mortgage, refinancing, etc.
- Soft Inquiries The type of inquiry that does not affect your credit score. On your credit report Soft Inquires are listed as Account Review and Promotional Inquires.
- Account reviews are when you pull your own credit report and when creditors that you already have a relationship with pull your credit report.
Promotional inquiries occur when a business checks your credit report in hopes of offering you their product/service; this is completely legal as long as their inquiry is marked as 'Promotional' on your credit report. You can prevent this access, however, by visiting www.optoutprescreen.com and opting out.
Does an Inquiry Affect Your Credit Score?
While credit inquiries may have a negative impact on credit scores, inquiries alone will never cause you to be declined. Negative information will invariably have a greater impact on scores than credit inquiries. Recent credit inquiries, however, concern creditors because they may indicate you have added debt they don’t know about yet. That’s why you often are asked to explain recent credit inquiries when you apply for a mortgage. The older the inquiry, the less important it is.
Your creditors only see credit inquiries from transactions you initiate. So credit inquiries resulting from preapproved credit offers aren’t provided to creditors. Because people shop for the best rates when making a home or auto purchase, credit scoring systems count inquiries for those reasons that occur with a short period of time as only one inquiry.
