Publish Date - September 30, 2019
Author: Dale Peterson
Credit Score Facts - Inquiries on CB Report
We get asked a number of questions about inquiries relating to credit bureaus. For example: Is it true that if your credit has been checked too many times it could affect your score?
Another question that we regularily get is: How many times can we check our credit without affecting the score?
Although it’s true that your credit score may fall slightly (2-3 pts) following some types of credit checks, experts and credit bureaus all say that when you shop around for auto, student or mortgage loans during a short time frame, it results in a single inquiry. If you have good credit, multiple inquiries may have zero effect on your score. Credit cards are a different story but we are primarily talking about auto loans and getting pre-approved for auto financing.
To prevent credit score damage due to multiple hard inquiries over a short time period, scoring models recognize that borrowers often shop around for the best loan. We call it “Smart people Shop” so why would you get a lower score for being smart? You don’t! “Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan,” FICO’s consumer information advisor explains. For purposes of calculating the credit score, “inquiries for mortgage lending and auto finance (new, used & refinance) purposes within a given period of time, generally 14 days, are counted by credit scoring systems as a single inquiry,” says the director of public education for credit bureau Experian. We have heard this ourselves, directly from each of the credit bureaus and have posted this fact in our FAQ’s and on our website. “There is no limit to the number of inquiries for those purposes,” he says.
While auto, mortgage and student loan applications over a brief period are treated as a single inquiry, that isn’t the case for credit cards. For consumers, “this means that each additional credit card inquiry can potentially hurt your score — although by less than 5 points each in most cases,” says the consumer operations manager for myFICO .Com. “For this reason, randomly applying for credit cards is not a good idea. Instead, when credit card shopping, consumers should first do their homework by comparing rates, terms and features being offered by lenders, and then only apply for the cards that best meet their needs.”
Still, it’s unlikely that credit checks will prevent you from borrowing. “Inquiries alone will never be the reason an application is declined,” he says. That means as long as your credit report shows a record of on-time payments, you don’t need to worry much about having your credit checked from time to time.