Credit inquiries may have no impact on your FICO scores; and when they do, the impact may be so minimal and short-lived that you would be well advised to ignore them, rather than launching a credit repair offensive. How can this be?
The Score of Choice for Lenders
The FICO scoring model is the statistical decision tool of choice for most lenders. The number of lenders using other non-FICO score models (including Vantage, PLUS, and TransRisk) peddled by the bureaus and other credit report sites are negligible. Hence it is only the FICO response to an inquiry that matters – and in most cases the FICO approach to inquiries is far more favorable than other models.
Deceptive Credit Scores
Most consumers are ignorant of the distinction between real FICO scores and these “other scores” for the simple reason that none of the websites selling credit scores (including the three major bureaus) make the distinction very clear, frustratingly calling their products “credit scores”, as if this were a universal standard.
Other Scores Behave Differently
In fact, none of the sites selling credit scores offer FICO scores except MyFICO.com, the site operated by the creator of the genuine FICO score. So, if you want to know the true impact of inquiries on your FICO scores you must check your real FICO scores, because the scores offered elsewhere on the Internet are irrelevant to lenders and respond differently to inquiries than FICO itself.
Multiple Inquiries – No Worry
The FICO model allows an unlimited number of auto, mortgage, or student loan inquiries in any 45 day period, and combined they only count as a single inquiry against your score. In addition, FICO will not even count the hit for 30 days. Once the hit is calculated it will range from 0 to 5 points depending on your overall profile, history, and depth of credit.
It Looks Worse Than It Is
People are often blindsided by the appearance of dozens of auto inquiries on their credit report, become needlessly distraught, and sign up for a credit repair service out of desperation. They may even observe their non-FICO score drop 30 or 40 points as a result. It all seems horrible, but it is an illusion. If they were to take a deep breath and check their real FICO score they would be relieved to see that their scores have not budged.
Disturbing Deceptive Denial Letters
If you apply for credit and are turned down, creditors are required to provide notification of the adverse action and to include the reason(s) for your denial. Denial letters are automated, and for the sake of expediency and the need to cover all bases, they list every contributing factor regardless of importance. In other words, your denial letter is virtually guaranteed to cite your inquiries as a reason for denial even when their weight in the decision was near zero.
What Really Matters
When it comes to credit repair, it makes sense to focus on priorities. Issues that matter should come first, and those that do not can be ignored. Inquiries are usually in this second category. This is made even more pertinent by the fact that inquiry hits fade so fast. Although an inquiry can continue to appear on your report for 2 years, the influence on your score usually fades to zero within 6 months.