How many credits inquires is too many?
What’s the difference between say 1, 15, or 100?
Learn the answer here from our credit expert John Ulzheimer.
Hi. My name is John Ulzheimer, and I’m a credit expert who contributes to CreditCardInsider.com.
If you have any questions for us please leave them in the comments section below. Today’s question is from Hany in Chicago, Illinois and his question is this…
How many credits inquiries is too many? What’s the difference between say 1, 15, or 100?
Very good question. Inquiries are influential in your credit scores however they are not overly influential so if you had to graph or put on a pie chart the relative contribution of different aspects of your credit reports the inquiry category would take up a very small 10 percent of that pie. So while they are influential, they’re not terribly important.
There are 2 types of inquiries that appear on consumer credit reports there are referred to as soft inquiries or hard inquiries. Let’s get soft inquiries out of the way. Soft inquiries are not seen by lenders. And they have no influence on your credit scores.
Soft inquiries are going to be things like promotional inquires that show up when credit card issuers buy your name from the credit bureaus and sends you pre-approved offers of credit, which most people get in their mail every single day. Those inquries have no influence, although you may have dozens and dozens of them on your credit reports at any given time.
Hard inquiries, completely different type of inquiry. A hard inquiry is generally reactive to when you apply for something. So if you go out and apply for home loan or an auto loan, or you go to a credit card issuer and you want them to increase your credit limit, or you wanna get a new card, they’re generally pull your credit report in every single one of those transactions. That’s gonna leave behind a little breadcrumb that’s referred to as a credit inquiry.
Inquiries a very simple piece of information. It’s just the name of the creditor, and the date on which they pulled your credit report. And credit inquiries do have the potential to lower credit scores albeit very minor and not terribly often. In fact, roughly 7 to 8 out of every 10 credit inquiries are ignored because of the logic in both the FICO and VantageScore credit scoring systems, and how they devalue multiple inquiries from industries where people tend to shop for credit, like mortgage and auto loans and student loans.
The difference between 1,15, and 100 inquiries, that’s a pretty drastic difference. Obviously someone who has one inquiry looks very different than someone who has 15 or 100 inquiries. Many inquires will generally mean that someone is going on some sort of credit credit acquisition marathon. And that indicates high risk, which means your scores are going to be lower.
People who have few inquires or no inquiries on their credit reports are generally going to earn the most points in the inquiry category. It’s important to keep in mind that inquiries will remain on your credit report for up to two years.
Hard inquiries, however, and this is important, they only have potential to influence your credit score in the first 12 months that they’re on your credit file. Even further than that, in the FICO credit scoring system mortgage, auto, and student loan inquiries are ignored for the first 30 days if their on the credit report.
So if you really wanted to split hairs over the issue mortgage, auto, and student loan inquiries can only influence your credit scores for 11 months, because they are ignored for the first month, and they only count up to month 12. Even though they’re physically still present on the credit report, they have no influence on a credit score. When you’re talking about avoiding inquiries, it’s very easy to do.
An inquiry is generally caused by something that you do. And most people who load up on inquiries generally do so during the holiday season when they open many retail store cards to take advantage the 15 to 20 percent discounts.
You can avoid doing things like that, meaning applying for a lot of credit in a very short period time, then you’re gonna avoid inquiries are you’re generally going to do very very well in the inquiry category albeit a very very minor category in all credit scoring systems.
So again if you have any questions pertaining credit or financial topics, then please submit them to CreditCardInsider.com or in the comments section below. Thanks for watching! Have a great day!