Credit Repair and Your Inquiries
Inquiries May Hurt, or They May Not
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.
- Credit Repair
- Credit Scores
- Inquiries
9 Responses
Thanks for this. I was pretty freaked out last week when I saw a huge number of inquiries on my credit report. This calmed me down.
i have been afraid to even check my credit, maybe i shouldnt let collectors know where i am. can they take my paycheck or money out of my paycheck?
Hi Stephanie, Ouch! You are correct, if you check your credit and use your current address the credit bureaus will have your location. Collectors have the right to check your credit, and often do! Which means that collectors will be able to see your address and you may trigger some unwanted collection activity. Collectors cannot garnish wages without a court order – which means they have to sue you first. You should not start credit repair until you are ready to confront these issues. On the other hand, if you don’t want to live “off the grid” anymore I suggest that you bite the bullet, run your credit, and get with us right way to evaluate your situation. It may not be as bad as you think! You might like to browse our Credit Repair Q and A Collection Category.
I got turned down for a credit card at Sears. They wouldn’t tell me why at the store but i got a letter a week later that said i got turned down only because of inquiries. no other reason. i just looked at my report an had 12 inquiries in the last 6 months. 5 of them were in the last few weeks. is that enough to get denied? Can you delete them?
Hi Bonita, Based on the info you provided, I’d say that you were turned down mainly because of the most recent 5 credit inquiries. That is enough to raise a red flag in any credit card approval software (regardless of how perfect your credit may be otherwise). This phenomena is indicative of the near-paranoia that lenders are suffering from in the wake of the credit meltdown that started in 2006. Prospective borrowers everywhere are finding that qualifying for a loan is not as easy as it once was. The logic behind the turn-down is that you may have 5 pending loans just waiting to strain your budget! This may not be the case of course, but the credit approval software does not know this. The good news (based on our observation) is that the red flag will be lifted in 60 days (assuming you did NOT open new accounts in that time frame), so feel free to reapply when the time comes! I doubt that you need credit repair for your inquiries, but if the problem persists, or you feel that the inquires are not accurate and you would like them fixed, please give a call.
You would not believe the number of inquiries on my report. It is true that I went shopping for a car last month (and I bought one). I went to three different dealers, but I didn’t tell them to shop rates for me or anything of the sort. I would really like to dispute these? Is that something Sky Blue can do, or should I try it myself?
Hi Billy, I sympathize with your plight. This is a very common occurrence. Car salesman tend to be pretty determined to put deals together and often do not broadcast the fact that their finance manager is shopping the deal with every finance company they have access to. The good news is that the impact on your score, regardless of the number of inquiries that happened, is minimal. Assuming that you did all of your shopping within a 45 day period your score should not get hit for more than 5 points. Unfortunately, credit inquiries look bad and can influence lenders regardless of your score. So, yes, situations like this justify remedial action. You can certainly hire us to dispute these unauthorized inquiries, or you can do it yourself if you feel up to investing the time.
Are there cases where car inquiries will hurt you more than just the one hit. Because I went shopping for a car and got 5 inquiries and my scores fell about 20 points.
Hi Brandon, there is one case where you can get hit more than once for car inquiries that occur within a 45 day period of time. If the lender is not set up properly with the credit bureaus and the inquiry is not coded as coming from an auto finance company the inquiry would not get excluded from your score calculation as it should. This is rare, but it could happen. Even so, 20 points is an awfully big drop. I suspect that there is something else involved. Even a small increase in a revolving balance (like a credit card) can cause a point drop like that.