07-12-2012 10:11 AM
I understand how credit scores work with regard to repeated inquiries for things like auto loans, mortgages, and student loans. The FICO score does not react to multiple of these kinds of inquiries if they occur within a certain period of time. My question is this: does this part of the score rely on the KOB (kind of business) codes or some other codes that are embedded in the inquiry? For example, if I shop for a car loan at the dealership and they submit my application to 2 auto finance companies, 2 banks and 2 credit unions, those are all going to have different KOB codes, probably something like AU, BB, and FC. It seems that using the KOB codes would not provide any real way to identify all six of these as auto loan inquiries. Is there some other code used that could link these as auto loan inquiries?
07-12-2012 11:06 AM
When a creditor requests your report they are obligated to include a reason code for the request. If the reason code provided is for auto loan for example then FICO scoring will group all of these requests and count them as only one inquiry. They will still show on your report as separate inquiries and other creditors will not necessarily be aware that they were all for one purpose.
The problem arises when the reason code is more generic such as extension of credit or loan. Then FICO scoring does not recognize them as for the same purpose. And as i said other lenders may not either. Your avenue with other creditors is a reconsideration appeal if you are denied credit for too many inquiries. There is no available method to have inquiries recoded or deleted by the credit bureaus as they are dependent on the information provided by the requester.
Please understand that the purpose for request reasons I gave are generic and not necessarily the actual codes used by the lenders or bureaus. I am using them for illustration only. If you want the specific codes and their keyword within the request the information is available with a search through the governing regulations.