Thursday, September 25, 2014

Multiple Credit Inquiry Impacts

Third party credit reviews or “hard inquiries” impact credit scores for 12 months from the date they occur even though they can be seen for 24 months. There are windows of time that a consumer can have multiple third party credit reviews and it will only impact the score as one inquiry. This happens only with mortgage, student loan, and car financing hard inquiries. Each of these categories has its own window where multiple credit reviews are considered as one. All other third party reviews can drop scores 2-5 points each time they occur. When an individual has many hard inquiries or third party reviews it can be considered “excessive shopping” and reduce scores dramatically. In many cases 6 hard inquiries (in total) in a 12 month period are considered excessive shopping and can drop Fico credit scores 20-40 points. Depending on what threshold a mortgage applicant needs for loan approval or the best interest rate available this could devastate their options. If a consumer buys their own credit scores from the Fico site their credit scores will not drop, even if it’s 100 times a day. If a promotional credit card offer is extended it also will not reduce scores. These types of inquiries are considered “soft inquiries” and will not hurt credit scores at all. If the promotional offer was accepted by the consumer a hard inquiry would occur before the final approval on the offer is given by the creditor.

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