Home Buddies – Home Ownership Coach – Houston, Texas

Too Many Inquiries on my Credit Report

A very common quote on a credit report is “Too many recent inquiries in the last 12 months”. But as you look through your report you only see a few inquiries listed. So how and why in the world is your credit report telling you that you have too many inquiries, and how is this really affecting your credit score?

It means that for consumers who have a similar credit profile as yours, that there is a maximum number of inquiries that you can have and still get the maximum points for the factor that looks at the number of inquiries on your credit report. That number will vary according to the different credit profiles that people have. If you exceed that pre-determined maximum number of inquiries for your designated profile, then you receive less than the most points possible for this particular scoring factor, and the explanation will indicate that you have “too many” inquiries.

If you are searching for new credit, then FICO can see this as a greater credit risk. This is why your credit score will count the number of inquiries. Inquiries are requests that a lender makes for your credit report or score when you apply for credit. FICO scores consider inquiries very carefully because some inquiries are not related to credit risk.

Usually, one additional credit inquiry will take less than five points off of your credit score. Six inquiries or more on your credit report can be perceived as the fact that you are eight times more likely to declare bankruptcy than people with no inquiries on their report.

Your FICO score regarding inquiries takes into account the following:

FICO scores know that people shop around more these days for credit, so they do take that into consideration and will distinguish between a search for many new credit accounts and rate shopping for one new account. FICO scores usually will distinguish between a search for a single loan and a search that you do for many new credit lines, in part by the length of time over which inquiries occur. When you need an auto or home loan, you can avoid lowering your FICO score by doing your rate shopping within a short period of time, such as 14 days. But be careful, because some research shows that opening too many credit accounts in a short period of time can increase your risk of hurting your score- especially if you don’t already have some well established accounts that provide great length of history.

Your FICO score looks at how many new accounts you have by the type of account (for example, how many newly opened credit cards you have). It also may look at how many of your accounts are new accounts. And how long since you’ve even opened any new accounts.

Inquiries remain on your credit report for two years, although FICO scores only consider inquiries from the last 12 months. It wants to know how many very recent requests that you have made for credit. FICO scores have been carefully designed to count only those inquiries that truly impact credit risk.

Many kinds of inquires are ignored completely. Your FICO score does not count an inquiry when you order your credit report and score from a credit reporting agency. It also does not count inquiries that a lender has made for your credit report or score in order to make you a “pre-approved” credit offer, or to review your account with them, even though you may see these inquiries on your credit report. Inquiries that are marked as coming from employers are not counted against you either.

Good Luck.

Barbara Partaka
Home Buddies