Credit Inquiries
We get a lot of questions on this one! So here are the answers:
Hard Inquiry:
- Lowers your score a couple of points for each inquiry.
- Occurs when you apply for credit, as in an auto loan, mortgage, or credit card, even that "get a discount if you apply for a card" booth at the retail store.
- They say that multiple inquiries in a certain time frame for the same type of credit do not count as multiple inquiries, but we have our doubts as to whether that is true or not. In report after report, we see multiple inquiries of the same type reporting in a set time frame. If each inquiry reports, then it stands to reason that each inquiry lowers the score, without some serious computer programming involved. If the scoring occurs behind the scenes, there is no way to know for sure that what they say is factual.
- We have seen cases where individuals took 10 auto loan inquiries in a day, and their score dropped about 22 points, lending credence to the above theory.
- Many times collection agencies will do a hard inquiry on a report, when it should in actuality be an account review inquiry.
- Pre Screened inquiries do not hurt your score, but that soft inquiry can turn into a Hard Inquiry, if the lender re-checks your report prior to actually extending credit.
Avoiding Inquiries:
- Be careful of "letting bankers compete for your mortgage" You can get a dozen inquiries in a day with some online mortgage lead companies. Many online offers are no more than lead generators, they sell your info to others.
- Some Auto Dealers will fax your application to multiple lenders, rather than fax your credit report to multiple lenders. The difference is multiple inquiries vs. a single inquiry.
Soft Inquiries:
- Do not Lower Your Credit Score.
- Account Review inquiries; If, for instance you have a Cap One card, and they re-check your credit for a potential balance increase or decrease. This inquiry does not hurt your score.
- Personal Score Check; If you get your report from Annual Credit Report, TrueCredit, myFico, (not so)freecreditreport.com, or any of the multitude of other sites, these inquiries do not hurt your score.
- Monitoring Services are personal inquiries, and do not lower your score.
- Pre Screened inquiries do not hurt your score, but that
can turn into a Hard Inquiry, if the lender re-checks your report prior
to actually extending credit.
- Collection Agency inquiries can occur as either a "hard" or "soft" inquiry, but should be "soft" as in an account review inquiry. Since Collection agencies are in the business of lowering your score, they don't really care!
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