Inquiry Master Thread - understanding inquiries and how the affect your credit score

[Anonymous]

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@Anonymous wrote:

Hi Bird,

For clarity on your question, I have added 2 new revolvers in last 90 days.

I am waiting for the monthly reporting cycle to reveal the new account penalty points from EQ and TU. My INQs from 2 new revolvers are both on EX; penalty points for both EQ and TU should be same or very close, as both scores are within 12 points of each other. EQ and TU scores will help me infer the INQ point penalty for my situation (thick file, old file, no derogs, over 12 cards, over 250k total CL). There should be no other file changes (account or INQ aging changes).

Still awaiting to get HP vs SP INQ insights from my expert. It may merely confirm that there is no (or minimal) data difference or process difference that codes a pull as hard or soft aside from the policy difference of how the creditor decides to code it.

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You should not lose any points for inquiries on EQ and TU because the inquiry was done on EX. So I’m not sure what you mean by their scores allowing you to infer the inquiry penalty. Or do you not have a daily Experian account to be able to discriminate the inquiry points when they occur?

As I said, you should only have one new account penalty from scorecard reassignment when the first of your two new revolvers reports. If you lose any points when the second one reports, it’s from AAOA or AAoRA.

I would guess your new account penalty around 12-15 points depending on bureau.

Looking forward to the insight from your expert but keep in mind even if he brings you an SP and an HP, what kind of SP is it? If it’s one pulled for credit/AR it’s going to have everything, if it’s one pulled for promotion/marketing, it’s only going to have a name and address and possibly other demographic information.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Hi Bird,

For clarity on your question, I have added 2 new revolvers in last 90 days.

I am waiting for the monthly reporting cycle to reveal the new account penalty points from EQ and TU. My INQs from 2 new revolvers are both on EX; penalty points for both EQ and TU should be same or very close, as both scores are within 12 points of each other. EQ and TU scores will help me infer the INQ point penalty for my situation (thick file, old file, no derogs, over 12 cards, over 250k total CL). There should be no other file changes (account or INQ aging changes).

Still awaiting to get HP vs SP INQ insights from my expert. It may merely confirm that there is no (or minimal) data difference or process difference that codes a pull as hard or soft aside from the policy difference of how the creditor decides to code it.

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You should not lose any points for inquiries on EQ and TU because the inquiry was done on EX. So I’m not sure what you mean by their scores allowing you to infer the inquiry penalty. Or do you not have a daily Experian account to be able to discriminate the inquiry points when they occur?

As I said, you should only have one new account penalty from scorecard reassignment when the first of your two new revolvers reports. If you lose any points when the second one reports, it’s from AAOA or AAoRA.

I would guess your new account penalty around 12-15 points depending on bureau.

Looking forward to the insight from your expert but keep in mind even if he brings you an SP and an HP, what kind of SP is it? If it’s one pulled for credit/AR it’s going to have everything, if it’s one pulled for promotion/marketing, it’s only going to have a name and address and possibly other demographic information.

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The matter of new account penalty points vs INQ points is indeed to what I was referring.

For example, if I lost 10 points for an INQ + a new account on EX, but I only lose 5 points for a new account on EQ and TU, that infers that for my file type, an INQ costs ~5 points. OK, so I know that in F*8 math, 5 points is about a 1% score impact (850-300=550/5=.009). Not a big deal.  Guilty as charged: I am a data nerd.

The matter of SP v HP to me is more about the originating party that actually decides and controls whether INQs are coded SP or HP.  

I was unsure about the originating party AND the tripwire; that is, does the bureau decide to charge you, or the issuer (seems like the issuer), AND, is it manditory or discretionary (seems discretionary).

A recent test case for me on this matter was Chase. I requested a CLI and was charged a HP (actually, they were so kind, they gave me 2. 2 INQs not two CLIs!!!). I requested CLIs from Amex and Citi - all SPs. So that tells me that it is the issuer that charge you HPs IF*THEY*WANT*TO. It stronly appears that the HP vs SP coding decision IS discretionary by the issuer and their policy. Perhaps that is a point that has been crystal clear to everyone but me, as I thought that a HP was determined and decided and coded by the bureau. 

For me, if a phone number is included or not included in my record is immaterial. I could not prevent it from being included or excluded anyway. I care about the HP INQ.  

Yes, INQs are a minor cost in points. Too many, however, become a problem for some issuers, and yes, with good cause.

Yes, I have the ultimate discretion as to deciding to request the app or CLI. I get that.

The matter and the rub for me is that it is a discretionary (not manditory) action on the part of the issuer.  

Yes, I understand that there is a symbiotic relationship between issuers and bureaus. They need each other. I further understand and appreciate that the US credit reporting system is an efficient one. It is more accurate and lower cost for all issuers (banks, card issuers, mortgage companies, et al) than having each issuer try to gather all of the information individually and independently, especially when there is a mistake.  The centralized US credit reporting system is imperfect, but in the aggregate of a centralized vs distributed system, it works well.  Issuers can make high speed, low cost, data informed, risk based decisions. Perhaps new blockchain and distributed ledger entrants like Spring Labs will create an even faster, more accurate, and lower cost credit reporting system than the bureaus. Credit reporting and scoring is a $10B industry (EQ, EX, TU, FICO).  A $1B bite of a $10B pie is worthwhile for a startup or any operating company. Ultimately, issuer acceptance (and or regulation) will determine if, where and when that happens...

TLDR: If anyone out there has an effective approach to getting issuers to recode HPs, or language to get them at application or CLI request to avoid the HP, I welcome your advice and insight.

[Anonymous]

OK if I recall your file type is clean/aged/thick/new account. (Was no new account-assuming you had no revolvers <12 mo before these 2).

That being the case I would say an inquiry would cost you under 5 points usually when it’s not binned, and a new account penalty, like I said probably 10 to 15 points. You’ll suffer the new account penalty and any AAOA penalties across all three bureaus; the inquiry only on the bureau that took it.

Yes the originating party determines how the inquiry is coded. It’s definitely the issuer and it’s totally discretionary on their part how they code it. That’s why some issuers will give SP CLIs and some won’t. That’s why it’s good to research these boards before you make a move then you know what to expect. Chase is always an HP if you request it from what my knowledge is. American Express is almost always SP, citi is SP what they offer you, HP if you want more. BBT is HP.

You’re not typically going to get an issuer to recode an HP unless you have a good reason like if they pulled you twice on the same bureau. I’m assuming Chase pulled you twice but on two different bureaus?

You simply have to expect an HP and hope for the best when you go for an increase but there are many that are known to be SPs and there are certain techniques that you can use, it just depends on issuer. You have to do the research on this site for the particular issuer, do you have one in mind you’re curious about?

[Anonymous]

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@Anonymous wrote:
OK if I recall your file type is clean/aged/thick/new account. (Was no new account-assuming you had no revolvers <12 mo before these 2).

That being the case I would say an inquiry would cost you under 5 points usually when it’s not binned, and a new account penalty, like I said probably 10 to 15 points. You’ll suffer the new account penalty and any AAOA penalties across all three bureaus; the inquiry only on the bureau that took it.

Yes the originating party determines how the inquiry is coded. It’s definitely the issuer and it’s totally discretionary on their part how they code it. That’s why some issuers will give SP CLIs and some won’t. That’s why it’s good to research these boards before you make a move then you know what to expect. Chase is always an HP if you request it from what my knowledge is. American Express is almost always SP, citi is SP what they offer you, HP if you want more. BBT is HP.

You’re not typically going to get an issuer to recode an HP unless you have a good reason like if they pulled you twice on the same bureau. I’m assuming Chase pulled you twice but on two different bureaus?

You simply have to expect an HP and hope for the best when you go for an increase but there are many that are known to be SPs and there are certain techniques that you can use, it just depends on issuer. You have to do the research on this site for the particular issuer, do you have one in mind you’re curious about?

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The Chase double was 2 different bureaus.  My heartburn is that I have multiple cards with them.  They know me. They know my behavior. 1 HP. OK, I get that, but do not like that, as I had not requested anything from them in some time.  I am consistently responsible with my usage with my Chase card portfolio. 1 HP,  ummmmm....well..... if you must.  But the must was not a must. It was their choice. I have a 10+ year history with them. Never over. Never late. One time over 50% usage, and that was 1 month out of more than 120 months.

All that said, I did then initiate the request - and for that I fully expected to get a HP - from them when I did another CLI on another Chase card which put me over 100K in CL in my Chase card portfolio.

Perhaps I am merely crabby from being quarantined without enough Quarantinis (bad joke).

And perhaps, I was expecting more favorable treatment. And perhaps I ought not expect that. I want it, I appreciate it, but perhaps it is only a selfish want.

My intent on starting this INQ thread was to help others. Yes, INQs are included in the New Credit category, which comprises only 10% of a credit score per FICO.  If you allocate 50% to INQs and 50% to new accounts, INQs do not make up much of one's score. I did want to help others who visit this board to be smarter on INQs, and if I have helped just one person get better at it, I can say mission accomplished.

[Anonymous]

It's not 50/50, its scorecard dependent.

yeah I had a family member that had a preapproved offer from Chase and it said a report would be pulled so I took issue with that because they pulled from two different bureaus but the language didn't say 2 reports. So I totally hear you.

sometimes the single hit sometimes the double hit it just varies and depends on your profile and with yours I don't see why it would've been necessary to double pull. We don't have access to their thinking.

oh absolutely we have a great thread on inquiries to refer people to now, mission accomplished indeed, congratulations and kudos!

Edited for clarity 4/5/20 12:04. I didn't want it misinterpreted that two reports were pulled from each bureau it was a total of two reports, one from each bureau but the language indicated A report would be pulled. 

[Anonymous]

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@Anonymous wrote:

I may be wrong but I think that new accounts would take up a bigger ratio than the inquiries of that sector of the pie, but that could be scorecard dependent.

yeah I had a family member that had a preapproved offer from Chase and it said a report would be pulled so I took issue with that because they pulled two from two different bureaus but the language didn't say reports. So I totally hear you.

sometimes the single hit sometimes the double hit it just varies and depends on your profile and with yours I don't see why it would've been necessary to double pull. We don't have access to their thinking.

oh absolutely we have a great thread on inquiries to refer people to now, mission accomplished indeed, congratulations and kudos!

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Thanks Bird.  I appreciate your remarks, and the others who contributed, and whose knowledge helped to improve and enrich this thread - and my understanding of INQs.

[Anonymous]

A (sort of) brief perspective about inquiries (INQs) for someone new to the topic, and concerned about how much they matter:

FICO scores have 5 key ingredients:

-Payment history - 35% of your score

-Amount of debt - 30% of your score

-Length of credit - 15% of your score

-Types of credit - 10% of your score

-New credit - 10% of your score

FICO*8 uses a 300-850 point range. It is hard to score a 300, and harder still to score an 850. The 850-300=550 total points you can earn.

Applying the 550 points to each of the FICO ingredient categories:

-Payment history - 35% of your score = 192.5 possible points

-Amount of debt - 30% of your score = 165 possible points

-Length of credit - 15% of your score = 82.5 possible points

-Types of credit - 10% of your score = 55 possible point

-New credit - 10% of your score = 55 possible points

Now, each ingredient category has subscoring areas. For new credit, there are 2 main subcategories:

-Number of recent inquiries (within the last 12 months; inquiries older than 12 months matter but become unscorable after 12 months)

-Age (in months) of most recently opened account (otherwise referred to as AoYA, age of youngest account)

Outside of folks within FICO who can see the inner workings of the FICO models, no one truly knows the precise weight in points between number of INQs and AOYA. Further, the weighting may have slight differences based on your file type (old vs young, thick vs thin, etc). If we make a broad assumption that the 55 points are equally split between number of INQs and AOYA, that means the INQ score has 27.5 potential points that you can earn. You earn/lose those points based on your behavior (which is what FICO was designed to measure, your credit behavior). If you do not apply for credit in 1 year, that is, no INQs, you will likely earn the 27.5 points. If you applied 9 times, you would likely earn 0 points for INQ behavior (see below).

If you translate 550 FICO points into a 0-100 range, (where 300 FICO results in a score of 0% and perfect 850 FICO is a perfect 100%) each score point is equivalent to .182.  As an example a 650 FICO8 score would be equivalent to a 63 (650-300=350*.182=63), and a 750 FICO8

would be equivalent to an 81. 

Hope that all makes sense.

So let's look at the actual score impact that INQs have.  Remember, the most FICO points (for FICO8) you can earn are 27.5 for INQ behavior. 27.5 FICO points X .182 is 5. So that means up to 5% of your score can be earned by not taking any inquiries for 1 year.  But INQs are "binned."  Binned means that there are INQ ranges. In FICO8, 0 INQs for 1 year is best, 1-2 INQs is the next best scoring range, 3-5 is next best, then 5-8, then more than 8. That means that each INQ is not the entire 27.5 FICO points or 5 % of your score. If you have 3 INQs within 1 year, it may cost you 10-15 FICO points, depending upon your file type. The MOST it would cost you is 27.5 FICO points. 

What is the point? INQs are the LEAST important scoring area to worry about. Payment behavior is the MOST important scoring area.

INQs are 5% of your score. Payment behavior is 35% of your score, or 7 times more impactful on your score.

Do not fret over INQs. They do have a point cost, but it is minimal. Do not take them if you do not need to but do not fear them.

Payment history and amount of debt are the most important. They are 192.5+165 total points, or 65% of your score. If you were to earn all of those available points, and you were a disaster with length of history, types of credit and new credit and earned NONE of those points, your score would be 300+192.5+165 = 657. If you were excellent in the payment and amount of debt categories, and only average in the other 3, your score would be 300+192.5+165+41+27+27=752. Not bad.

Does the scoring work EXACTLY like that? No, but it is very close to that.

Do not fear INQs, but....

Now, also know that when you take an INQ for applying for a new card, and when you are approved for the new card, there is a new account penalty. So taking an INQ for a CLI MAY cost you a few points, based on your file and how many INQs you have had in the last 12 months (binning). But when approved, you likely will charged more points for adding the new account. New accounts are the other part of 'new credit' FICO ingredient category, again, worth the 27.5 points.  New accounts are likely binned as well. I have not seen metrics if they are treated and binned like INQs. As I have begun testing this, I am reporting the impact on my own score, and will update that during April 2020 as the impact to my score is reported. 

Remember that the worst score impact for new credit that you can have is 10% of your score, or about 55 points.  Remember also that new accounts WILL change your length of credit, or credit age. That may or may not affect you, but be aware of that impact before you apply for a new card. 

Happy scoring.

[dragontears]

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@Anonymous wrote:

A (sort of) brief perspective about inquiries (INQs) for someone new to the topic, and concerned about how much they matter:

FICO scores have 5 key ingredients:

-Payment history - 35% of your score

-Amount of debt - 30% of your score

-Length of credit - 15% of your score

-Types of credit - 10% of your score

-New credit - 10% of your score

FICO*8 uses a 300-850 point range. It is hard to score a 300, and harder still to score an 850. The 850-300=550 total points you can earn.

Applying the 550 points to each of the FICO ingredient categories:

-Payment history - 35% of your score = 192.5 possible points

-Amount of debt - 30% of your score = 165 possible points

-Length of credit - 15% of your score = 82.5 possible points

-Types of credit - 10% of your score = 55 possible point

-New credit - 10% of your score = 55 possible points

Now, each ingredient category has subscoring areas. For new credit, there are 2 main subcategories:

-Number of recent inquiries (within the last 12 months; inquiries older than 12 months matter but become unscorable after 12 months)

-Age (in months) of most recently opened account (otherwise referred to as AoYA, age of youngest account)

Outside of folks within FICO who can see the inner workings of the FICO models, no one truly knows the precise weight in points between number of INQs and AOYA. Further, the weighting may have slight differences based on your file type (old vs young, thick vs thin, etc). If we make a broad assumption that the 55 points are equally split between number of INQs and AOYA, that means the INQ score has 27.5 potential points that you can earn. You earn/lose those points based on your behavior (which is what FICO was designed to measure, your credit behavior). If you do not apply for credit in 1 year, that is, no INQs, you will likely earn the 27.5 points. If you applied 9 times, you would likely earn 0 points for INQ behavior (see 

........

Payment history and amount of debt are the most important. They are 192.5+165 total points, or 65% of your score. If you were to earn all of those available points, and you were a disaster with length of history, types of credit and new credit and earned NONE of those points, your score would be 300+192.5+165 = 657. If you were excellent in the payment and amount of debt categories, and only average in the other 3, your score would be 300+192.5+165+41+27+27=752. Not bad.

Does the scoring work EXACTLY like that? No, but it is very close to that.

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 I would argue that it is NOT even close. While seemingly logical it COMPLETELY ignores known score factors such as scorecard assignments. 

This is wrong information. You are trying to simplify a very complex algorithm and it doesn't work that way.

I do agree that inquiries are not worth stressing over the way some people do.

[Anonymous]

Hey Dragon,

Thanks for your quick response.  To help me, and others on this forum and this topic, please let me know specifically know what I misstated.

Without questions, there is complex interaction across the ingredients. My intention was to isolate the impact of INQs.  Further, I mentioned file type in reference to scorecards - are those the elements that you find 'not even close', or are there other matters that I have missed or misstated?

Thanks for your remarks and insights that make this topic - and these forums - more valuable.

I would argue that it is NOT even close. While seemingly logical it COMPLETELY ignores known score factors such as scorecard assignments. 

This is wrong information. You are trying to simplify a very complex algorithm and it doesn't work that way.

I do agree that inquiries are not worth stressing over the way some people do.

[dragontears]

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@Anonymous wrote:

Hey Dragon,

Thanks for your quick response.  To help me, and others on this forum and this topic, please let me know specifically know what I misstated.

Without questions, there is complex interaction across the ingredients. My intention was to isolate the impact of INQs.  Further, I mentioned file type in reference to scorecards - are those the elements that you find 'not even close', or are there other matters that I have missed or misstated?

Thanks for your remarks and insights that make this topic - and these forums - more valuable.

I would argue that it is NOT even close. While seemingly logical it COMPLETELY ignores known score factors such as scorecard assignments. 

This is wrong information. You are trying to simplify a very complex algorithm and it doesn't work that way.

I do agree that inquiries are not worth stressing over the way some people do.

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The big thing you are missing in trying to assign points to the different scoring factors is the scorecard assignment. 

For example while the entire FICO range is 300-850 someone on a dirty score card will not be able to reach 850 (until their profile is clean) on the same note someone on a clean scorecard will never be able to reach a 300 (unless they get moved to a dirty scorecard). So in reality the scorecard assignment is going to set the min and max score possible for the profile in question. What the min/max is for every score card is unknown. 

The exact things which influence scorecard assignment is proprietary and there are a lot of guesses about it but no facts other than there are 8 of them. 

Hopefully this helps illustrate why you can't just take 550 points multiplied by the percentage to assign a points value to inquiries.