Collection Inquiries and Credit Scores
Your credit score comes from a formula that may consider a variety of factors, including but not limited to how you’ve paid your bills, how much you currently owe, the types of credit you’ve used, how long you’ve been using credit and how many inquiries appear on your credit report. Though it’s not the most significant factor, hard inquiries can impact your score, including some inquiries made by collection agencies.
Size of Impact
The number of inquiries on your credit report contributes about one-tenth to your credit score on some scoring models. The more hard inquiries reflected on your report, the more they could impact your credit score. However, there’s not a specific point value that your score goes down with each inquiry because the impact depends on the rest of your credit profile, as well as the scoring model being used.
Duration of Inquiries
Although most negative credit information will remain on your credit report for a maximum of seven years, inquiries remain on your report for about two years. In addition, as time passes, the significance of each inquiry declines, even though it still appears on your report. For example, a collection agency inquiry from 22 months ago won’t have as much weight as a collection agency inquiry from just 2 months ago.
In the grand scheme of your credit score, inquiries usually aren’t the biggest factor. And, they may not be the single reason for an application being declined. If you have a collection agency pulling your credit report, chances are you have accounts that might be behind, if not already in default. Getting those accounts current and paying them on time should be a top priority for your credit health.
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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.
