Credit inquiries can be disturbing. It is not surprising that a fair number of people starting our credit repair program express concern about the inquiries that show up on their reports. Credit inquiries can be a problem, or they may have no impact whatsoever.
Rate Shopping and Inquiries
Many people go car shopping and later discover a cascade of credit inquiries on their credit report. Maybe they only visited a single car dealer, who, without their knowledge, went loan shopping on their behalf. Mortgage comparison shopping may also result in an alarming number of inquiries. Rate shopping for a big ticket item is smart, and you shouldn’t be punished, and FICO agrees!
Special Cases: Mortgage and Auto Inquiries
Fair Isaac, the creator of the FICO scoring model, recognizes that rate shopping can be smart business, and treats mortgage and auto inquiries in a special way which alleviates the need for credit repair. You can have as many credit inquiries as you want in a 45 day period of time and you will be hit for a single inquiry only. Further, the single inquiry will not hit your score for 30 days. So, if you check your report and see a long list of auto or mortgage inquiries, do not panic.
How Much Does an Inquiry Hurt?
An inquiry will cause your score to fall between 1 and 5 points. The exact impact will depend on the overall content of your report. If you have extensive, well established credit the effect of an inquiry will be on the low side. If your credit is limited the hit will be more.
Inquiry Score Hits Fade Fast
The good news is that the hit from an inquiry fades fast. The inquiry itself will live for two years on your credit report, but after six months the effect is negligible, and moving towards zero. The decision to dispute an inquiry as part of your credit repair program should depend on whether there are more important issues to work on.
Priorities Come First
When we are setting up your credit repair plan we will evaluate all of the issues on your report that need to be addressed and prioritize them. Items that will yield the best score improvement will come first, while those of lesser weight will be on the bottom of our list. There may be exceptions, but generally inquiries are left until the end. Often we find that by the time the important problems are fixed, the inquiries are not an issue anymore.
A Word of Caution
This does not mean that the inquiry section of your credit report should be ignored when you are starting your credit repair project. If an examination of your report reveals mystery inquiries, they may be a sign of fraudulent activity. Fortunately, credit reports include contact information for your creditors, including those represented in the inquiry section. So, if you are puzzled by an inquiry you should contact the creditor for more information.