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Question about Inquiries

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Question about Inquiries

Hello everyone,

 

I'm new to the Mortgage forum, since I seem to live in the Credit Card forum Smiley Very Happy.  Recently, I've been thinking about getting a house, but not for a few years down the road (I'm 21 now).  My accounts are all very new, nothing bad reporting, just trying to build up my file.

 

I was wondering about how long hard inquiries stay on the credit report.  I've heard 1 year, and I've heard 2 years--so I'm leaning towards 2 to err on the side of caution.

 

I know inquiries when applying for mortgage loans = BAD!  So I'm wondering,  does it really take 2 years to fall off.  Or longer?  How long should I hold off on credit card applications before looking for a mortgage?

 

Thanks!


Goal Scores: 720+ (Experian Lender Pull 09/13): 733; Discover TU (01/14): 751; Walmart TU08 (02/14): 754;
WF Platinum (10/12) $1,600; WM Discover (12/12) $5,500; Amazon GE (12/12) $2,500; CapOne Quicksilver (12/12) $750; Discover IT (01/13) $1,000; Chase Amazon (02/13) $2,500; Citi Forward Student (02/13) $2,000; AMEX BCE (09/13) $15,000
Message 1 of 5
4 REPLIES 4
Valued Member

Re: Question about Inquiries

Hard inquiries (affect credit score) remain for two years, however I have noticed that the inquiries that resulted in new credit have fallen off of my report in one year. You seem to have enough trade lines open right now. I would not obtain additional debt/credit until after the home purchase.  Inquiries, new debt  will initially lower your credit score. Additional monthly debt will determine how much of a mortgage payment you can afford.

Message 2 of 5
Valued Contributor

Re: Question about Inquiries

They typically stay on your credit report for two years. I have noticed as well that sometimes they fall off sooner than that but they don't impact your score as much after 1 year. When you shop the best rate for a single loan, all the inquiries acquired over a short period of time associated with a particular line of credit are treated as one inquiry but it will still show the full count per individual inquiry. So if you have to shop a loan for the best rates, it is best to app for that loan over a short period of time...not 1 INQ in June, and then wait, and then another in Sept. The other plus to keeping INQs concentrated, is that they will all fall of together.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 3 of 5
Valued Contributor

Re: Question about Inquiries

I should add that inquiries when applying for a mortgage are not necessarily bad. They can be more detrimental if your qualifying score is low. For me, I have 4 INQs with more on the way as I had to switch mortgage lenders to take advantage of some incentives on a particular home. My mid fico is 703 and was pre approved with 4 previous recent INQs for a car lease in Nov, and 2 CCs in July and Dec, and a mortgage qual check in July. New accounts don't hurt if they are opened at least 120 days from apping for a mortgage. My broker told me my newest account for a Chase Freedom app'd for in Dec won't hurt either as long as I don't charge anything to it, in which I didn't plan to until after closing. To be on the safe side, many folks will stop apping a year before applying for a mortgage. I have very good reasons for my recent INQs, so not concerned and nor is my broker. You have to write a letter of explanation for each INQ you acquired within the past 120 days and the reason, "app spree" doesn't count...LOL! Once you are pre approved, the brokering firm asks that you don't apply for new credit or use your credit cards until after closing. I checked the CC usage clause with my broker because I use my CCs for everyday expenses for cash back and then I PIF before the statement cuts. He said that is OK if it is used for everyday expenses and not for large purchases in order to take advantage of 0% APR. I also recommend that you consider increasing your 401K deductions now, if your contributions aren't already maxed out because we are going to need to take a loan out on our 401K to help with moving & replenishing savings for emergencies once the down payment is cleared. You don't want to withdraw from your 401K because the taxes & penalties are hefty. But you can borrow up to 50% of its value and pay it back usually up to over a 20 year period if used for a residential purchase.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 4 of 5
Contributor

Re: Question about Inquiries

Thanks for all the info!


Goal Scores: 720+ (Experian Lender Pull 09/13): 733; Discover TU (01/14): 751; Walmart TU08 (02/14): 754;
WF Platinum (10/12) $1,600; WM Discover (12/12) $5,500; Amazon GE (12/12) $2,500; CapOne Quicksilver (12/12) $750; Discover IT (01/13) $1,000; Chase Amazon (02/13) $2,500; Citi Forward Student (02/13) $2,000; AMEX BCE (09/13) $15,000
Message 5 of 5
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