Credit is much more popular today. Just look at the number of credit card offers you get via the internet and in the mail. Consumers can now shop for credit and find the best terms for their situation. Every time someone runs a credit check on you, it creates an inquiry. Are you searching for new credit accounts or just rate shopping? Fair, Isaac has changed some of its calculations to account for rate shopping. This is handled by treating a grouping of inquiries — which probably represents a search for the best rate on a single loan — as though it was a single
inquiry (note: this only applies to auto or mortgage loan inquiries). For instance: auto loan inquires that are within 14 days of each other only count as one inquiry. Your score takes into account:
- How many new credit obligations have recently been assumed ? Opening several credit card accounts at the same time can look bad. What FICO is look for is “ To what extent is this consumer trying to open new credit accounts?”
- How recent were these efforts? How long it has been since you opened a new account. Primarily these factors:
- Number of inquiries in last six months
- Number of trade lines opened in last year
- Number of months since most recent inquiry
- There are no good inquiries. Inquiries or typically seen as a request for credit and thus are factored as if you are searching for credit. Every time you fill out one of those credit card applications to get a free hat, you are also getting a free inquiry. Every time you fill out an online application for a credit card, or other type of loan, you are getting an inquiry. Too many inquiries looks bad. While there are no good inquires there are neutral inquiries. These inquiries are most often known as:
- Consumer initiated. A request for your credit report shows as a consumer inquiry. When you run a credit check on yourself. (provided that you don't call your mortgage broker buddy to pull your report)
- Pre-Approval. If a potential lender has viewed your credit reports to determine whether they want to offer you a loan, these are not factored into your score. However, once you fill out a credit application, your full report will be reviewed and a “bad” inquiry will appear on your reports.
- Periodic Review. Many lenders will periodically review the credit reports of their current customers to see if there have been any major changes to their credit reports. If the lender discovers that your credit score is now too low for their standards, they may close your account. These inquiries created as a result of the periodic reviews are not supposed to be factored into your credit score.
Dept. Store |
68 |
1 |
Applied for 1 department store card |
Mortgage |
65 |
1 |
Two mortgage apps within 30 days of each other counts as only 1 inquiry |
Mortgage |
56 |
Auto |
25 |
1 |
|
Auto |
9 |
Not counted at all if within 30 days of first inquiry. |
These two don't count at all as they were within 30 days of the first app and within 15 days of each other. |
Auto |
7 |
Bankcard |
5 |
1 |
|
As you can see from the above chart, inquiries appear in different ways depending on the length of time between inquires and the type of Inquiry.
How inquiries are computed is somewhat complex. The above table is meant as a basic guide but does not cover all the different calculations. As a reasonable measure you should avoid unnecessary inquiries. The system is designed to take into account rate shopping but things like applying to credit card offers will add inquires to your file.
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