When you apply for credit, you authorize those lenders to ask or "inquire" for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. The only inquiries that count toward your FICO Scores are the ones that result from your applications for new credit.
It's important to know that there are 2 types of credit inquiries. Soft inquiries such as viewing your own credit report will not affect your FICO Score. Hard inquiries such as actively applying for a new credit card or mortgage will affect your score. Read below to see how much hard inquiries can affect your FICO Score.
More examples of hard inquiries:
- You go car shopping and apply for financing at the car dealership and they pull a credit report on you.
- You get a preapproved credit card offer in the mail and respond to the offer.
- You contact your credit card company and request a credit line increase. The company pulls a fresh credit report on you to help determine if they will grant the line increase.
More examples of soft inquiries:
- Your bank gets an updated FICO Score on all its customers to check the credit quality of its customer base.
- You got a new job and your employer pulled your credit report as part of its new employee screening process.
Do credit inquiries affect my FICO Score?
FICO's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO Scores can be lower as a result. Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years.
If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.
How much will credit inquiries affect my score?
The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores.
For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part are only 10% of what makes up a FICO Score. Much more important factors for your scores are how timely you pay your bills and your overall debt burden as indicated on your credit report.
What to know about rate shopping
Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your scores while you're rate shopping.
In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14-day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45-day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.
What to remember when you are rate shopping
If you need a loan, do your rate shopping within a focused period such as 30 days. FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which the inquiries occur.
When you look for new credit, only apply for and open new credit accounts as needed. And before you apply, it's good practice to review your credit report and FICO Scores to know where you stand. Viewing our own information will not affect your FICO Scores.
As a general rule, it is OK to apply for credit when needed. Be mindful of this information so you can start the credit-seeking process with more confidence.
FAQs
Soft inquiries such as viewing your own credit report will not affect your FICO Score. Hard inquiries such as actively applying for a new credit card or mortgage will affect your score.
How does inquiry affect credit score? ›
How do hard inquiries impact your credit score? A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases, the damage probably won't be that significant. As FICO explains, “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”
What affects your FICO credit score? ›
What's in my FICO® Scores? FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
What 3 things does the FICO Score look at for new credit inquiries? ›
The information about inquiries that can be factored into your FICO® Insurance Score includes: Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account. Number of recent credit-seeking inquiries. Time since recent account opening(s), by type of account.
Does looking at FICO Score affect credit score? ›
Checking your credit reports or credit scores will not impact credit scores. Regularly checking your credit reports and credit scores is a good way to ensure information is accurate. Hard inquiries in response to a credit application do impact credit scores.
What's a good FICO score? ›
Does your credit score go up after inquiries fall off? ›
Your credit score does not go up when a hard inquiry drops off your credit report. Your score will not go down when a hard inquiry drops off, either. Instead, a hard inquiry (or hard credit pull) stops having an impact on your credit score after one year, which is one year before it drops off your credit report.
What decisions affect FICO Score? ›
5 Things That May Hurt Your Credit Scores
- Making a late payment.
- Having a high debt to credit utilization ratio.
- Applying for a lot of credit at once.
- Closing a credit card account.
- Stopping your credit-related activities for an extended period.
The main categories considered are a person's payment history (35%), amounts owed (30%), length of credit history (15%), new credit accounts (10%), and types of credit used (10%). FICO scores are available from each of the three major credit bureaus, based on information contained in consumers' credit reports.
What lowers your FICO Score? ›
Not paying your bills on time or using most of your available credit are things that can lower your credit score. Keeping your debt low and making all your minimum payments on time helps raise credit scores. Information can remain on your credit report for seven to 10 years.
The primary credit scoring models are FICO® and VantageScore®, and both are equally accurate. Although both are accurate, most lenders are looking at your FICO score when you apply for a loan.
What is the most important factor for a good FICO Score? ›
Payment history is the most important factor of your credit score, making up 35% of FICO® Scores.
What is a good credit score to buy a house? ›
Some types of mortgages have specific minimum credit score requirements. A conventional loan requires a credit score of at least 620, but it's ideal to have a score of 740 or above, which could allow you to make a lower down payment, get a more attractive interest rate and save on private mortgage insurance.
How many hard inquiries are too many? ›
The answer differs from lender to lender, but most consider six total inquiries on a report at one time to be too many to gain approval for an additional credit card or loan.
What affects your FICO credit score the most? ›
The most important factor of your FICO Score is your payment history, which makes up 35% of your score. Here's what other factors matter. What Is a Credit Utilization Rate? Your credit utilization rate is the percentage of your revolving accounts' balances that you're using.
How much does a credit inquiry impact your score? ›
In general, credit inquiries have a small impact on your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores. For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history.
How many points do you get when a hard inquiry falls off? ›
Credit inquiries make up about 10% of your total FICO score. But keep in mind that there are other credit-scoring companies and models, like VantageScore®, that a lender could use. A hard inquiry typically only causes credit scores to drop by about five points, according to FICO.
How much does a 2 hard inquiry affect credit score? ›
However, multiple hard inquiries can deplete your score by as much as 10 points each time they happen. People with six or more recent hard inquiries are eight times as likely to file for bankruptcy than those with none. That's way more inquiries than most of us need to find a good deal on a car loan or credit card.
How long do inquiries stay on your credit score? ›
Both hard and soft inquiries stay on your credit report for two years. Since hard inquiries do hang around on your report for a while, you want to be careful not to apply for a lot of credit in a short period. The reason is too many inquiries can be a red flag to issuers.
Can you remove inquiries from your credit report? ›
You can, but it will take time and effort. The most effective strategies are to either dispute the inquiry with the creditor that placed the inquiry on your credit report or complain to the credit bureaus. Neither of those strategies is likely to work with a legitimate hard inquiry.
