Effect of Inquiries on scores

[Red1Blue]

If I understand and remember correctly, the inquires will have an effect on credit scores for 12 months and they physically drop off the reports in 24 months. Am I correct or do they have a different effect on the calucation of credit scores? What is the total effect of inquires on the credit scores and for a 5 separate inquires in one month,  how much score drop can we anticipate?

[Anonymous]

Each enquiry will cost you 10 points.

[Red1Blue]

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@Anonymous wrote:
Each enquiry will cost you 10 points.

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What ? Are you serious? Are you saying if I have 5 inquires then I'll loose 50 points in scores? That does not make sense to me. Is it real 10 points for each inquiry?

[EW800]

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@Red1Blue wrote:

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@Anonymous wrote:
Each enquiry will cost you 10 points.

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What ? Are you serious? Are you saying if I have 5 inquires then I'll loose 50 points in scores? That does not make sense to me. Is it real 10 points for each inquiry?

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I believe that is bad info, or at least in my experience it is.  

Our experts may be able to answer this better, however every profile is different.  I know in my case, when I went from zero inquires to one, I was dinged about two or maybe three points.  When I added another one, there was no impact.  I suspect there would have been more of an impact if I would have added a third.  I think I have read about some people taking a five or so point hit for the first couple of inquiries, however again, I believe it varies profile to profile.  

If you added several within a month, as you mentioned, if they were all coded the same, such as shopping for a car loan or a mortgage, then they should only count as one inquiry, although they will each still show on your reports.  If they are shopping for credit credit cards or not coded as indicated above, then they each likely count on their own as a full inquiry.  

From the comment above, I seriously doubt that every inquiry would cost someone ten points, or at least not that I have read or heard about.  

[Red1Blue]

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@EW800 wrote:

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@Red1Blue wrote:

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@Anonymous wrote:
Each enquiry will cost you 10 points.

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What ? Are you serious? Are you saying if I have 5 inquires then I'll loose 50 points in scores? That does not make sense to me. Is it real 10 points for each inquiry?

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I believe that is bad info, or at least in my experience it is.  

Our experts may be able to answer this better, however every profile is different.  I know in my case, when I went from zero inquires to one, I was dinged about two or maybe three points.  When I added another one, there was no impact.  I suspect there would have been more of an impact if I would have added a third.  I think I have read about some people taking a five or so point hit for the first couple of inquiries, however again, I believe it varies profile to profile.  

If you added several within a month, as you mentioned, if they were all coded the same, such as shopping for a car loan or a mortgage, then they should only count as one inquiry, although they will each still show on your reports.  If they are shopping for credit credit cards or not coded as indicated above, then they each likely count on their own as a full inquiry.  

From the comment above, I seriously doubt that every inquiry would cost someone ten points, or at least not that I have read or heard about.  

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Hi EW800, Thanks for your input. I think I'll take some hit but not sure if it is going to 50 points. I am not planning on applying for any more credit at least for next 6 months and by that time the impact of these inquires should reduce on my scores. Right now I am trying to get some baddies out of my report and also make settlements for some of the charge off accounts and hopefully that will also help my to make my scores go up. We will see what future brings.

[sarge12]

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@Red1Blue wrote:

If I understand and remember correctly, the inquires will have an effect on credit scores for 12 months and they physically drop off the reports in 24 months. Am I correct or do they have a different effect on the calucation of credit scores? What is the total effect of inquires on the credit scores and for a 5 separate inquires in one month,  how much score drop can we anticipate?

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The effect of inqueries is dependant on overall credit profile. Usually inqueries are also accompanied by new accounts which affects both AAoA(negatively) and Utilization(positively). The inquiry itself has a negative affect for 1 year as you stated, but it is decreasing the older it is, so an inquiry 1 month ago is more negative than an inquiry 6 months ago. It does drop off after 24 months as you thought. If you have a thick file, and long history the negative harm will be less than someone who has a thin file or short history.

[Anonymous]

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@Anonymous wrote:
Each enquiry will cost you 10 points.

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This is not true.

Inquiries do not have a significant impact on your score.

The "new credit" category accounts for 10% of your score, and inquiries are one factor in that equation. The type of inquiry matters, too. If you're rate shopping for loans, you won't be penalized as much as if you apply for 10 credit cards, for example.

Recent inquiries (< 6 months) are typically considered by the lender themselves, regardless of their FICO impact.  The reason for this is that it can take up to 6 months for a new account to show up & lenders want to see if you can handle the new responsibilities you've already taken on with some history.

[HeavenOhio]

A recent inquiry on my Experian report dinged me three points. This would have been the second Experian inquiry in four months, and it made for two total inquiries in two years. It's clear that the change came from the inquiry. The notification flew in immediately, and my report and score had been previously updated about two days prior.

As mentioned above, the effect of an inquiry is going to be different for every profile and every bureau.

[Anonymous]

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@Anonymous wrote:
Each enquiry will cost you 10 points.

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This is not an accurate statement.  Not only can a blanket statement like this not be made since all credit profiles are different, but their are dramatically diminishing returns when it comes to inquiries... like difference between going from 0 to 2 is going to be more significant than going from 7 to 9, even though in both cases 2 inquiries were added.

[Anonymous]

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@HeavenOhio wrote:

A recent inquiry on my Experian report dinged me three points. This would have been the second Experian inquiry in four months, and it made for two total inquiries in two years. It's clear that the change came from the inquiry. The notification flew in immediately, and my report and score had been previously updated about two days prior.

As mentioned above, the effect of an inquiry is going to be different for every profile and every bureau.

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It's important to understand that algorithms aren't this simple and that your score may fluctuate up and down over time because of software updates and the like. While a score change may be carried by a notification, and that may have been your only change in some time, that doesn't necessarily mean the two are directly connected.

This also doesn't indicate that each inquiry will be worth 3 points. 30 inquiries on your profile may be worth 3 points. It's whether or not you are shopping for and receiving new credit, and how that fits into the rest of the risk model with the rest of your report.

I've also seen this on Experian (the three points down with 1 inquiry alert), and a month later it was back up 3 points. 

That being said, 3 points is a negligible change. It doesn't feel like that when you're trying to climb, of course, but it really is. When you are rebuilding your concern for 'credit shopping' should have NOTHING to do with the immediate impact on your score. It should be why you are shopping for credit, and whether or not you can handle that credit. I started building credit in Febrary of 2016 and I have a boat load (42) of inquiries that will drop off in a year, and another smaller boat load (20) the following year. I can still get credit - in fact, I just got an AMEX BCE, Chase Amazon, and NFCU CLOC accounts less than a month ago. My credit score has gone way up. In fact, the only issue I have in potentially obtaining credit at the moment (other than my still slightly below average scores), is with Chase because of their 5/24 rule. Not a single lender has batted an eye over my heavy inquiries as it's clear I was building a credit profile and then have used that credit very responsibly during the subsequent year.