topic Re: Inquiries Question in Understanding FICO® Scoring

Inquiries Question

Anonymous — Sun, 17 Jan 2010 03:48:49 GMT

Between January and March of last year I made inquiries of mortgage companies trying to get a refinance. The rates were not what I wanted and I never actually made application. I was told these were "soft" inquiries. They all end up on my hard inquiry list and is scored "bad" in FICO scoring. In all there are 7 inquiries

One of them ended in my receiving a new mortgage loan for an investment property I purchased. (5 mortgage loan inqiries)

One was a Discover card inquiry. (1 inquiry)

One Wachovia for a school loan (1 inquiry)

How do I get these removed when I was told they would be "soft" inquiries. Also, I thought in FICO scoring if the same type inquiry (mortgage loans) were made during the same period of time they would not be counted in configuring the total score.

I want to increase my score in this one area. How do I do that without waiting 2 years?

EQ 1/2010, 699

EX 12/09, 723

TRANS 11/09, 710

750Lady

Re: Inquiries Question

Lel — Sun, 17 Jan 2010 04:46:03 GMT

There's no way that the mortgage lenders could have quoted you rates without doing an inquiry, and they always pull hard. These are thus legitimate inquiries, but you were apparently misinformed. I find it odd that every lender you spoke to gave you the same incorrect information.

For the newer versions of FICO, which includes the EQ score from here (Beacon 5.0) and TU 04 (which is not available on this site), mortgage inquiries within a 45 day window are scored as a single inquiry. For TU 98 (the version sold here) and the most commonly used EX version (not readily available anywhere), the window is 14 days.

Did you apply for a Discover card, or request a credit limit increase? If so, then that is a legitimate hard inquiry.

The inquiry for your school loan is also a legitimate hard inquiry.

You may not be able to get these inquiries removed, since they were all done for reasons initiated by you (with the assumptions above, that is). In addition, it may not be worth your effort. Even though hard pulls remain on your credit report for 2 years, they are only factored into scoring for 1 year. So within a couple months, these inquiries are not going to have any effect on your credit score.

Re: Inquiries Question

llecs — Sun, 17 Jan 2010 04:52:03 GMT

Any inquiry made in the attempt to get credit will be a hard inquiry. They are almost never soft inquiries.

You don't have to wait two years. FICO only scores inquiries for the first year, even though they report for 2 years. So, if these were between January and MArch of last year, then by March of this year, none of those 7 inquiries will be impacting your FICO score.

You are right on the mortgage inquiries. Depending on the CRA and version of score used, they are lumped together as one single inquiry. Even though your report showed 5 mortgage inquiries, you are only dinged for one of those if the 5 inquiries were within a certain period (15-30 days or so).

Remember, the "Amount of New Credit" that shows "Bad" now, also includes any opened credit. Inquiries have a very minor role in that section with any opened credit impacting your score the most.

ETA.....Once again cursed with slow typers' syndrome.

Message Edited by llecs on 01-16-2010 11:52 PM

Re: Inquiries Question

Anonymous — Sun, 17 Jan 2010 05:02:33 GMT

llecs wrote:
ETA.....Once again cursed with slow typers' syndrome.

Message Edited by llecs on 01-16-2010 11:52 PM

Don't feel so bad. What my fingers do at a keyboard cannot in any shape, form, or fashion be considered typing.

Re: Inquiries Question

Anonymous — Sun, 17 Jan 2010 19:09:22 GMT

Thanks for the information concerning the mortgage inquiries. I did not know the exact number of days were in the window. The year is almost up and I look to see if my scores improve by a few points. The Discover hard inquiry I believe was because I used the balance transfer option. I transferred a balance from a high interest rate card which was less than the 1/2 the total credit limit of the Discover card. I pay the account in full before the transfer interest rate expires. I will do that one more time with Discover with a transfer rate of 0% until May from a card with a 14% rate. Even though these inquiries will have no impact on my scores, will they stop being reported and counted as inquires? I will work on reducing the AM and BoA balances. 750Lady

Re: Inquiries Question

Anonymous — Sun, 17 Jan 2010 22:27:42 GMT

@Anonymous wrote:
Thanks for the information concerning the mortgage inquiries. I did not know the exact number of days were in the window. The year is almost up and I look to see if my scores improve by a few points. The Discover hard inquiry I believe was because I used the balance transfer option. I transferred a balance from a high interest rate card which was less than the 1/2 the total credit limit of the Discover card. I pay the account in full before the transfer interest rate expires. I will do that one more time with Discover with a transfer rate of 0% until May from a card with a 14% rate. Even though these inquiries will have no impact on my scores, will they stop being reported and counted as inquires? I will work on reducing the AM and BoA balances. 750Lady

They will still show for the two full years but have no impact after one year.

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 03:15:21 GMT

Even though inquiries aren't factored in FICO scoring after 1 year, they still may be considered a negative factor if you apply for credit.

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 15:52:56 GMT

@Anonymous wrote:
Even though inquiries aren't factored in FICO scoring after 1 year, they still may be considered a negative factor if you apply for credit.

I'm sometimes (often) slow to understand. How can inquiries not be factored in scoring after a year but still be considered a negative factor? How can they be looked at in two opposite ways?

I'm just asking.

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 17:38:00 GMT

@Anonymous wrote:
@Anonymous wrote:
Even though inquiries aren't factored in FICO scoring after 1 year, they still may be considered a negative factor if you apply for credit.
I'm sometimes (often) slow to understand. How can inquiries not be factored in scoring after a year but still be considered a negative factor? How can they be looked at in two opposite ways?

I'm just asking.

Perhaps on a manual read? Maybe?

Re: Inquiries Question

Jazzzy — Mon, 18 Jan 2010 18:14:51 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
Even though inquiries aren't factored in FICO scoring after 1 year, they still may be considered a negative factor if you apply for credit.
I'm sometimes (often) slow to understand. How can inquiries not be factored in scoring after a year but still be considered a negative factor? How can they be looked at in two opposite ways?

I'm just asking.
Perhaps on a manual read? Maybe?

Yes...it can be a manual read...or, it can be computerized. The 1-year rule on inquiries speaks to FICO scoring only. That doesn't mean creditors don't count how many times you've sought credit in the past two years (as opposed to just one year). Creditors can count inquiries any way they please.

Also, this same scenario can apply to mortgage and auto inquiries. Just because FICO counts them as one if they are done within a certain timeframe, that doesn't mean your future creditors will do likewise.

I think it's prudent to watch how many inquiries are on your reports for the full two years.

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 18:20:25 GMT

I don't know how to express how I appreciate everyone's input to my questions and inquiries. Can anyone tell me where all these written/unwritten rules are located? I think I'm headed in the right direction from my speculations in my previous posts, but maybe there is something else I can do or look out for, maybe...?!?! I'd like to be headed in the right direction to get my scores up. 750Lady

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 19:51:02 GMT

@LynetteM wrote:

Yes...it can be a manual read...or, it can be computerized. The 1-year rule on inquiries speaks to FICO scoring only. That doesn't mean creditors don't count how many times you've sought credit in the past two years (as opposed to just one year). Creditors can count inquiries any way they please.

Also, this same scenario can apply to mortgage and auto inquiries. Just because FICO counts them as one if they are done within a certain timeframe, that doesn't mean your future creditors will do likewise.

I think it's prudent to watch how many inquiries are on your reports for the full two years.

That all makes sense. Even to me.

Re: Inquiries Question

Anonymous — Mon, 18 Jan 2010 23:25:32 GMT

750Lady wrote:
Can anyone tell me where all these written/unwritten rules are located?

If you're lucky, you'll find this information in a forum like this but I'm not sure there is a "manual" that will give any specific number or exact information. I've read posts on here where people have had dozens of INQ and been granted good credit. I just thought you should be aware that the one year rule applies to FICO scoring only. Many creditors I'm sure have an algorithm that puts more emphasis on those less than a year old, yet still look at those between one and two years as well - the score is not only important thing. In other words if you and I both have a 705 FICO, and I have 10 inquiries that are over a year old, where you have none, chances are you'll be looked at as a better credit risk... Just keep that in mind - they are still on your report even though FICO doesn't score them.

Another of my favorites peeves is the information provided on here about credit card usage. It's spread as common knowledge on here, that plain and simple, "let only one card report a balance that is around 1% of your total revolving credit" for optimal FICO scoring - as if nothing else matters. Well, I think that is only partly true - and that there are many other complicated factors involved, such as type of usage, how long since you've used a particular type, how high your past balances have been (utility), etc., etc. And, I think your score reflects this and not just your current utility usage, but noboby knows the FICO formula so they just say the old, "let one card report 1%...". Whew, I got a little long-winded there

Re: Inquiries Question

smallfry — Tue, 19 Jan 2010 00:54:10 GMT

As far as utilization goes FICO scoring has no memory. Your CCC might.

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 01:05:10 GMT

@Anonymous wrote:
Another of my favorites peeves is the information provided on here about credit card usage. It's spread as common knowledge on here, that plain and simple, "let only one card report a balance that is around 1% of your total revolving credit" for optimal FICO scoring - as if nothing else matters. Well, I think that is only partly true - and that there are many other complicated factors involved, such as type of usage, how long since you've used a particular type, how high your past balances have been (utility), etc., etc. And, I think your score reflects this and not just your current utility usage, but noboby knows the FICO formula so they just say the old, "let one card report 1%...". Whew, I got a little long-winded there

None of the things you cited above are factors in FICO scoring. The general UTIL advice given here is correct.

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 01:43:20 GMT

@Anonymous wrote:
@Anonymous wrote:
Another of my favorites peeves is the information provided on here about credit card usage. It's spread as common knowledge on here, that plain and simple, "let only one card report a balance that is around 1% of your total revolving credit" for optimal FICO scoring - as if nothing else matters. Well, I think that is only partly true - and that there are many other complicated factors involved, such as type of usage, how long since you've used a particular type, how high your past balances have been (utility), etc., etc. And, I think your score reflects this and not just your current utility usage, but noboby knows the FICO formula so they just say the old, "let one card report 1%...". Whew, I got a little long-winded there
None of the things you cited above are factors in FICO scoring. The general UTIL advice given here is correct.

I don't believe it. It is simply not possible that if you and I have the EXACT same credit profile and we have the exact revolving accounts, a mix of bank, store, gas accounts etc, and for the past two years you have used your accounts periodically and wisely, paid them off, etc., and I never used one account, and now come Feb., we both show a small balance on the one same account, that we will have the same score - impossible. You have proven your ability to manage different types of credit recently, where I have not. How on earth would we be equal? FICO would have gone broke a long time ago if this were the case. If you ever get a chance to get a look at the algo, I would bet my life there were more complicated factors than the 1%, 1 account reporting theory...

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 01:55:35 GMT

Unfortunately, you mistate the general advice. To be clear on the matter I repeat it here:

Optimal credit utilization for FICO scoring purposes is:

Total revolving utilization > 0 and <= 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.

Anyway you get there is fair game. You only need have one revolving TL report a balance.

A few individuals find they can tweak one of their FICO scores at the expense of another. This is generally those with more established (older, wider) credit files.

There are many other components to FICO score - We're only talking about revolving UTIL here - This rule of thumb regarding UTIL is correct.

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 02:11:00 GMT

But I'm not disputing the utility factor in itself. I will repeat my stance. I said that there are more complicated factors involved in the FICO score than simply utility, when it comes to revolving accounts - such as type of useage, time since usage, etc. You replied, "None of the things you cited above are factors in FICO scoring." That I disagree with.

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 02:31:56 GMT

None of the things I highlighted in red in your previous statement are a factor in FICO scoring. FICO UTIL does not have a memory. It is pure timeslice.

Re: Inquiries Question

Anonymous — Tue, 19 Jan 2010 02:52:51 GMT

@Anonymous wrote:
None of the things I highlighted in red in your previous statement are a factor in FICO scoring.

Yeah, I got that already and responded directly to it - I disagree (see above).