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No more penalties for inquiries (clickbait wink wink)

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Regular Contributor

No more penalties for inquiries (clickbait wink wink)

So... in my sig, I say it's frustrating to work with two countries' financial systems.

 

While the title seems like a dream, Korea did away with penalizing inquiries a few years ago because it was deemed stupid. It's anti-consumer, anti-lending, anti-spending. That was a total breath of fresh air. If you think of it, why would inquiries on their own be a sign of risk? Yes, someone's out to borrow money, but if he's been denied everywhere, his financial liabilities haven't increased, and thus he's not more of a liability than before he started his search. By doing away with inquiry penalties, people are free to start applying with whoever offers the best terms and then go downward from there if they get denied. It also stops people from being so afraid of inquiries hurting their chances that they turn to easier-to-get, higher interest loans from the start (thereby feeding the loanshark industry) and then being unable to pay up.

 

The catch is that CRAs and financial institutions need to report new accounts immediately to prevent abuse. The first time I took out a personal loan (roughly $6k), my CRA app sent a push notification regarding my new account 5 min after approval. The second time (roughly $5k), I got it the next morning. The third time (~$25k which I'm still paying back), my CRA subscription was expired but the new account was there a few days later when I did check.

 

It'd be nice if FICO did away with inquiries as well. We'd see a lot more people app'ing and less gardening Smiley Happy I'd be app'ing for membership at every CU that offers a sub-10% card.


Starting Score: No Score (03/2018)
Current Score: 766 to 776 (05/2019)
Goal Score: 780 (have hit 789 EQ but only on FICO9)

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Message 1 of 9
8 REPLIES 8
Established Member

Re: No more penalties for inquiries (clickbait wink wink)

That would be great imo.
When I got my first car loan at 20yrs old I went to the 3rd lender and he was shocked when he pulled my credit report. The previous dealership literally applied at over 15 different lenders. My score dropped almost 50 points.

Id love for the bureaus to do away with inquiries OR maybe keep them for a max of 6 months
Message 2 of 9
Super Contributor

Re: No more penalties for inquiries (clickbait wink wink)


@XOJCT
When I got my first car loan at 20yrs old I went to the 3rd lender and he was shocked when he pulled my credit report. The previous dealership literally applied at over 15 different lenders. My score dropped almost 50 points.

That doesn't make any sense, unless the inquiries were all coded improperly (not as auto).  Auto inquiries made across a bunch of different lenders around the same time (within a 14 day period) are scored as a single inquiry; it doesn't matter if there's 3 inquiries or 100.  It's impossible for a single inquiry to drop a score 50 points. 

Message 3 of 9
Established Contributor

Re: No more penalties for inquiries (clickbait wink wink)


@BrutalBodyShots wrote:
That doesn't make any sense, unless the inquiries were all coded improperly (not as auto). 

Unfortunately, that is frequently the case... auto inquiries rather commonly show up as generic "bank" HPs, and when the lender is not clearly an auto-loan-only captive lender, there's no easy way for the scoring model to ID them as auto.

EQ8:850 TU8:850 EX8:850
EQ9:850 TU9:850 EX9:850
EQ5:809 TU4:789 EX2:819 - 2019-09-06
Message 4 of 9
Established Member

Re: No more penalties for inquiries (clickbait wink wink)

As I said, I was 20. I had been to about 3 different dealerships and they all did multiple HP’s.. there were 2 pages of inquiries when he printed my credit report.
Message 5 of 9
Regular Contributor

Re: No more penalties for inquiries (clickbait wink wink)

Unfortunately I had the same issue when a dealership applied with some 15-20 lenders to "get the best rates" and my credit also being new didn't help either. Not all of them were reported as "auto" but it dodn't impact my score as much as to go down by 50 points though. It was around 10 probably. Luckily all of them will fall off from my credit report by next may Smiley Happy




Message 6 of 9
Regular Contributor

Re: No more penalties for inquiries (clickbait wink wink)

Yeah, whether you had 1, 2, or 50 inquiries, it shouldn't matter since you probably ended up getting 1 loan anyway. Guy with 1 loan and 50 inquiries doesn't have more to pay back than a guy with 1 loan and 1 inquiry. Just FICO stuff I disagree with. Gah!!


Starting Score: No Score (03/2018)
Current Score: 766 to 776 (05/2019)
Goal Score: 780 (have hit 789 EQ but only on FICO9)

Take the myFICO Fitness Challenge
Message 7 of 9
Super Contributor

Re: No more penalties for inquiries (clickbait wink wink)



As I said, I was 20. I had been to about 3 different dealerships and they all did multiple HP’s.. there were 2 pages of inquiries when he printed my credit report.

It doesn't matter if it was 1 dealership and 1 inquiry or 10 dealerships and 10 pages of inquiries.  If the inquiries are coded correctly (auto) and are within 14 days of one another, they will be scored as a single inquiry. 

 

If your score dropped 50 points, the inquiries weren't coded correctly.  If you want those points back it would be in your best interest to have them adjusted/coded the right way.

Message 8 of 9
Established Member

Re: No more penalties for inquiries (clickbait wink wink)

They’ve all fallen off now.. it’s been about 5-6 years.. I was young and didn’t know as much about credit as I do now.
Message 9 of 9
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