Hard Inquiries - Duration

[Anonymous]

I have question about how Hard Inquiries affect your score. Initially, I thought the only aspect to them was that they stayed on your score for 2 years, and over a certain limit can lower your score accordingly. I noticed though, myFICO.com under the "Amount of New Credit" category seems to indicate that it really only affects your score for the first year?

I am reading this correctly? When I log into creditkarma, they show my hard inquires from the past 2 years, but this websites report shows a much lower number. I can only assume its because although they're technically on my report... FICO 8 isn't counting them against my score after the first 12 months.

[Glen_M]

Two parts to that answer:

• first, scoring, they have a generally negative impact on FICO scoring for the first year (new credit and credit seeking are considered "risky" behaviors);
• the second part, length of record, they stick around for two years by virtue of legal regulation (newer models than the standard FICO8, and individual companies may consider this behavior "risky" for longer than 12 months).

There are a few other instances of things sticking around on the credit record for longer than they are used to calculate an impact on FICO scores. 

[Anonymous]

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@Glen_M wrote:

Two parts to that answer:

• first, scoring, they have a generally negative impact on FICO scoring for the first year (new credit and credit seeking are considered "risky" behaviors);
• the second part, length of record, they stick around for two years by virtue of legal regulation (newer models than the standard FICO8, and individual companies may consider this behavior "risky" for longer than 12 months).

There are a few other instances of things sticking around on the credit record for longer than they are used to calculate an impact on FICO scores. 

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Great reply, Glen!  My only caveat would be the word "newer."  The natural thing our OP would conclude is that you are talking about FICO's newer model FICO 9.  But I think all FICO models (including FICO 9) stop considering inquiries after 1 year.  Let me know if I am mistaken there.

Better might be to say non-FICO models, rather than newer ones.  Vantage considers inquiries for the full two years, as do (I believe) the models used by the insurance industry.  And you are right that any indiviidual company can decide that it finds inquiries older than 12 months of concern.

[Glen_M]

It was more of a reference to future models/algorithims that we don't know much about yet.  For example, next year some financial regulations could come out that prompt new approaches to scoring. Hinging on the "may" later in the sentence.

A good example of the second type, company specific modeling, is Chase and their dislike of high numbers of inquiries ("5/24 Rule").  

[Anonymous]

Actually Chase doesn't have a problem with you having a lot of inquiries.  You can have 20 inquiries on your report and be fully 5/24 compliant.  The rule you are thinking of refers to the number of new credit cards on your report.  ("New" meaning in the last 24 months.)

Inquiries can be the result of opening an account with the local power company, or shopping for a car, or shopping for a mortgage, or successfully opening many other kinds of installment accounts, or applying for credit cards and being turned down.  None of these inquiries would result in a new credit card being opened.  That's why you can have loads of inquiries and still be 5/24 compliant.

The flip side is also the case.  You could have only 1 inquiry on the report Chase has pulled and nontheless not be 5/24 compliant, if the report has 5 new cards on it.

The reason that I misunderstood you is that you used the phrase newer models than the standard FICO8.  FICO 9 is definitely a model newer than FICO 8, so I figured you were including FICO 9 as a model that counts inquiries older than 12 months. But I see now that you didn't mean that.