have The Facts About How Credit Inquiries Affect Your FICO Score
How many points will an inquiry drop my credit score?
This is a question you can research and get a lot of conflicting information. Seriously! Google it. The different answers will amaze you. Heck, you might have made your own conclusion based on what your monitoring score reflected due to that last inquiry that hit your credit. So, which one’s right? Why is there so much confusion on this?
First let me clarify, we are talking about hard inquiries. These are the imprints or records of any company that pulls your credit for a loan, contract, service, or background check. (With your authorization if done legally.) Each time a vendor submits a request for your credit report, the bureau records the name of the company, type of inquiry, and date it was pulled. This information will reflect on your personal credit report.
We’re talking about your “real scores”.
With today’s consumer credit monitoring companies like Credit Karma, Credit Wise and so many others, coupled with the consumer scoring models they use, such as Advantage score and Fico’s consumer scores, it’s no wonder there’s so much conflicting information. For example, we see daily the Advantage score on Credit Karma alerting a client of a new inquiry that hit dropping their score over 20 points. However, these are not the real scores nor is this indicative of how the real scores would respond.
What do I mean by “real scores”? The ones the lenders use, the exact algorithm, scoring models that your lender uses is the most important score! Why? It is the one that determines a yes or a no or how much interest you pay. All the information I give you on this blog is based on how your real scores are affected.
An inquiry usually makes only about a 1-5-point difference on a score, on average about 2 points. However, this is not necessarily true for every inquiry. If a person has multiple related inquiries within the same period, the total of them will count as one. For example, the client is buying a car, the dealer pulls their credit, and sends it to multiple lenders shopping for the best approval. Although all of the inquiries will show, FICO will score them all as only one inquiry. Multiple inquiries that are same type and within a 30-day period will count as one. On the other hand, if you have a credit card inquiry today and apply for a cell phone tomorrow, those will count as two separate inquiries.
So how long do they count against me?
Inquiries stay on your credit for two years from the date they are made. After 6 months, however, their effect on your score starts to decrease. I’ve seen and heard many times that the effect of the inquiry is based on whether the customer is turned down or approved. This is simply not true and not relative in the score’s calculation. Inquiries have the same effect on your score regardless of approval.
Can you remove inquiries from my credit?
Sure – but hopefully you’re not paying someone to do this for you. I’ve seen companies that have really exaggerated the subject of inquiries and exploiting the amount of damage they do. They often use Credit Karma to back this up. Again, with the real scores the damage is minimal and will lose score influence in a few months. Normally if a person’s credit score is suffering there are “bigger fish to fry” and the focus needs to be on those.
At Credit Firm we focus on all derogatory items, including inquiries, as part of our process but we work on your restoration in a very strategic order. At the right time, we will send a dispute to the credit bureaus requesting proof that the inquiry was authorized. This results in many being deleted, but not necessarily all. Unlike other types of derogatory where we will use many different methods to remove negative items, we will only send disputes when it comes to inquiries. The only exception is when there is an actual fraud situation. Then we will file FTC and police reports and remove them that way. Again, we want to focus resources on the areas of the person’s credit that will make the most difference.
Will disputing inquiries help or hurt my score?
The credit bureaus can deem a consumer’s disputes as frivolous. They can refuse to process them as a result, including future disputes. This is unfortunate, especially when the process of trying to remove a more significant item is undermined due to a client or a company they may have hired having blatantly disputed every item on their credit, especially when triggered for something as insignificant as an inquiry.
Does my answer to your questions about inquiries conflict some of the information you’ve heard? No doubt! Let me qualify what I’m sharing. I want you to have confidence in what I’m telling you. I also want you to be able to reference me as an absolute authority on all things credit. Over the last 25 years I have helped tens of thousands of clients, working with real scores and simulations, monitoring each individual before, during, and after our restoration process. Their success coupled with my obsession to continuously master the ever-changing subject of all things credit has given me the expertise and experience to absolutely be your resource. Feel free to contact me if you have other questions or if you’re ready to take control of your future with your own credit restoration. You can also follow us on Facebook for more information and customer testimonials.