Inquiries Can Have A Negative Impact On Your Credit Score

Inquiries are when you apply for credit and a creditor "inquires" into your credit report to see if your credit score is good enough to qualify you for a loan, credit card, home mortgage, or any other type of credit. The inquiry itself is then reported on your credit report.

There are inquiries made by creditors from time to time that are not a result of you applying for credit. These are usually creditors that have extended you credit in the past and that you have given permission to view your credit report. I like to call these inquiries "soft inquiries" because they will usually not hurt your credit score that is derived from your credit report.

Inquiries that can damage a credit score are the ones that are a result of you applying for credit. These "hard inquiries" as I like to call them, may only lower your credit score a couple of points a piece, but a couple of points lost on your credit score may mean a point or two gained on your interest rates.

It should be noted that when applying for a home mortgage multiple inquires within a months time frame may not effect your credit score. This is because the credit scoring model takes into account that many people shop for home loans to find the best rates. They have determined that this is a sign of a responsible consumer thus the risk is not increased for creditors.


So what do you do to keep the amounts of inquiries to a minimum on your credit report?

Choose wisely when shopping for credit. Do not open a new department store account simply to get 15% off your purchase. Weigh the consequences and keep inquiries in mind.