Inquiries - effect on FICO score

[Anonymous]

To follow up on a recent thread that was just locked:

We know that inquiries stay on the report for 2 years, but only affect scores for 1 year.

I have heard that their effect on scores is full for 6 months, then gradually lessens for the next 6 before dropping to zero effect at 12 months.

Is this true?  Can someone characterize the effect of hard INQ's and when their effect drops?  It is not 100% effect for 12 months, is it?

[haulingthescoreup]

I had thought that too, but a couple of months ago, Barry (as in myFICO_Barry) said that there's no fade on the inq: it's there for 12 months, and then poof, it no longer counts.

I think what we're all seeing is the hurt from the late fading at 3 months and 6 months. When I had a late hit 12 months recently, I gained one whole point. Whoopee! But when the actual account hit 12 months, I gained around 5 points.

[llecs]

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haulingthescoreup wrote:
I had thought that too, but a couple of months ago, Barry (as in myFICO_Barry) said that there's no fade on the inq: it's there for 12 months, and then poof, it no longer counts.

I think what we're all seeing is the hurt from the late fading at 3 months and 6 months. When I had a late hit 12 months recently, I gained one whole point. Whoopee! But when the actual account hit 12 months, I gained around 5 points.

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If that could be said of inquiries, could the same be said about baddies, like a CA? I always thought everything was gradual, and that inquiries and others count less as time goes on. In fact, a couple of my denial letters referenced excessive inquiries (<6mo). If FICO doesn't care, CCCs do.

[haulingthescoreup]

My understanding is that baddies do have tiers where the hurt drops down. Inqs are not actually baddies, at least not for a reasonable number of them, lol.

It's just that creditors have agreed (price of admission, I guess) to publish when someone is looking for credit, so that others know if someone is in an app'ing frenzy. So you've either looked within the last year, or you haven't.

[Anonymous]

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@haulingthescoreup wrote:
I had thought that too, but a couple of months ago, Barry (as in myFICO_Barry) said that there's no fade on the inq: it's there for 12 months, and then poof, it no longer counts.
(snip)


Oh, thank you so much for posting this (and thanks to Barry, too). I (incorrectly) thought this was the case and it definitely is propagated on other (non-myfico) forums. What about new accounts? If there is a score hit with the new acct, does it get better at 3 mo age? 6 mo? Thanks!

[haulingthescoreup]

Reasonably sure that you get score improvements for account age at 3 months, 6 months, 12 months, 18 months, 2 years. This is reinforced by the FICO score estimator and by the sims at the end of your FICO EQ and TU reports. (EX won't participate.)

You can even play with the score estimator to see what score changes might happen as your cards mature. Run through one time with their current ages, then again with them all older, and see what (if anything) happens with your estimated score. Also, only enter the number on inqs you have on one report, not the total. The estimator gives even broader score ranges than the sims, but it's still fun to mess with, especially to see what would have happened if you hadn't had that late payment, etc.

http://www.myfico.com/FICOCreditScoreEstimator/Default.aspx

[Anonymous]

Thanks so much for this info, htsu. Btw, I think it's good for all of us to keep in mind that new accounts can still hurt a little bit between year 1 and 2 (12 and 24 mos since opening), even though they are no longer listed on the myfico report under "accts opened in the last year".

[RobertEG]

This category is not a biggie. It is a total of only 10% of overall score.   I model new inquiries with an initial hit of 10 points the first month, then decreasing linearly by 10/12 per month, reaching zero at month 13.  Whether it is straight linear drop per month, or hits bumps at 3, 6, 9, and 12 months is diminimus.  And, of course, the total for this category is limited to 85 points.  The question is not limited to the effect of this single 10% category, for if the inquiry leads to new credit, then other categories such as credit mix, %util, lenght of credit, number of TLs, etc. will also change.  One cannot look at a single FICO category and project overall effect if the change affects other categories.  Beware of the FICO simulator, for it a one category, simplified model.

[haulingthescoreup]

I realize that the simulator is by no means a precise tool. But I do figure that if it asks about certain activities within certain time frames, that indicates that there is something about those frames that count in scoring.