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Information credit report scores and number of credit checks

Can running your credit report to many times count against your credit scores?

Can running your credit report to many times count against your credit scores?

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Bill's Answer
(6 Votes) | Find Learn Save

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 a sign 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.

First, however, you should get a copy of your credit report: Get My Credit Report

However, the credit bureaus' scoring models purport 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 leasing 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.

Of course, we all know that credit reports are not perfect, so while in theory the bureaus will lump all inquiries for the same purpose together, it does not always work as desired. The fewer inquiries during the shopping period, the less likely an error will occur. To read more about credit, credit reports, credit scoring, I encourage you to visit the Credit Resources page.

I hope this information helps you Find. Learn. Save.



(6 Votes)

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