A credit inquiry gets added to your credit report each time a creditor pulls your report, but inquiries are not treated the same when it comes to your credit score. While you’re allowed to check your own credit report as often as you like without hurting your score, other types of inquiries can actually impact your credit score.
Types of Inquiries
Credit bureaus sort credit inquiries into two categories—hard inquiries and soft inquiries. Hard inquiries—the ones that can affect your credit score—result from a lender pulling your credit report in response to an application for new credit. For example, applying for a mortgage, car loan, credit card, larger line of credit or student loan all result in hard inquiries appearing on your credit report. Basically, the fact that you’re applying for new credit can hurt your credit.
Conversely, soft inquiries don’t affect your credit. These inquiries include you checking your own credit; an employer pulling your credit report as part of a job application process; or when a credit card company extends an offer of credit to you as part of its preapproval process. Again, these types of inquiries don’t impact your credit.
Size of Impact
The number of inquiries on your credit report counts for 10 percent of your Experian credit score, the smallest of any of the credit scoring factors. However, according to Experian, it’s impossible to predict exactly how much your score will change as a result of a single inquiry or multiple inquiries since everyone’s credit score is calculated differently. Moreover, Experian says that applicants aren’t usually turned down for credit based solely on the number of inquiries on their credit report.
Length of Impact
Inquiries remain on your credit report for two years after a lender’s initial query of your credit. Usually, however, the older the inquiry, the smaller its impact on your credit. For example, an inquiry from a credit card you applied for last week usually has a bigger impact on your credit than an inquiry which resulted from an application for credit 21 months ago.
Special Treatment for Certain Inquiries
When it comes to calculating your credit score, inquiries for auto loans and mortgages can sometimes receive special treatment. If you have multiple inquiries for the same type of loan in a short period of time, those inquiries may count as one [inquiry] when figuring your credit score. For example, if you apply for five car loans in the same week, you’ll see five inquiries on your credit report; however, for credit scoring purposes, those five inquiries may be treated as a single inquiry.
About the Author
Mark Kennan is a freelance writer specializing in finance-related articles. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2014 ConsumerInfo.com, Inc. All rights reserved.