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Information on Inquiries on Credit Report - The Bills.com Blog
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Information on Inquiries on Credit Report
Question: Does inquiries hurt your credit score? If so how long does it stay on your report? And if you have a landlord tenant judgement on your report and it's satisfied how long does it stay on there?
Answer: Generally speaking, multiple credit inquiries on your credit reports can have a negative impact on your credit rating, as most scoring models regard a lot of credit inquiries as asign of higher credit risk. The reasoning behind this aspect of credit scoring is that applying for a large amount of credit over a short period of time can indicate financial problems and looming default. Also, the credit bureaus’ statistical studies have shown that people who have applied for a lot of credit recently are more likely to default on their accounts.
However, the credit bureaus’ scoring models claim to be able to distinguish between those consumers who are attempting to open multiple lines of credit and those who are simply shopping around for the best deal. The bureaus do this by grouping inquiries for a single purpose, such as inquiries from mortgage companies, within a certain period of time into a single inquiry instead of multiple individual inquiries. The time frame used for the groupings varies between scoring models; FICO currently uses a 45 day “shopping” period. For
example, if you apply for a credit card with 10 different companies within a 45 day period, all 10 inquiries created when the credit card companies pull your credit would count as a single “shopping” inquiry. This single inquiry may slightly ding your credit, but certainly not as much as 10 individual inquiries would damage your score. When you view your credit report, you will see individual inquiries, but the inquiries will be lumped together when your credit score is calculated.
Also, be aware that whenever a company pulls a copy of your credit report, the credit bureaus will list an inquiry on your credit report. Credit inquires fall into two general categories: “hard” inquiries and “soft” inquiries. Hard inquiries, which can negatively impact your credit score, appear when a potential lender checks your credit as a result of your applying for new credit. Soft inquiries appear when
a company pulls your credit without your prior authorization, or when you pull your own report. For example, an unsolicited “pre-approval” letter from a credit card company will result in a soft inquiry. Soft inquiries are not disclosed to potential lenders when they pull your credit report, and they do not affect your credit score. The primary purpose of soft inquiries is to allow you to see who has been reviewing your credit report.
As far as your judgment is concerned, how long it will be reported depends on the State that you reside in, depending on which it might be anywhere from 7 to 10 years.
To read more about credit, credit reports, credit scoring, I encourage you to visit the Bills.com Credit Resources page .
I hope this information helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Lynne on Monday 24th March 2008 08:00
How can I see all of my soft pulls? I pulled a 3 bureau report from experian and it only showed my hard pulls. Do I need to go to each agency separately?
2. Posted by Bill on Monday 24th March 2008 09:06
I suggest you get individual credit reports from each of the 3 bureaus by visiting www.annualcreditreport.com. If a report shows both hard and soft inquiries, they are separated out on the report. The soft inquiries will be under a separate heading that will say something like "requests for credit viewable only by you." These are partial credit reviews that are done by existing creditors to make sure that you're behaving yourself, and seeing if they want to increase your credit limit, and also reviews by other companies to see if you fit their overall profile of potential customers. If you have pulled your own credit reports, you will also see that here. None of these affect your score or your credit in any way, shape, or form. Many of us here on the forums follow our softs to see who is interested in us, even though these don't affect our scores. Only way to limit them is to opt-out at www.OptOutPrescreen.com.