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

[Anonymous]

@Anonymous I’m more than happy to share my knowledge as it was freely given to me here. So don’t hesitate to ask if you have more questions I’m glad to answer them. They’re just may be a delay because life is crazy right now. And I appreciate your position because I was hungry to learn when I joined and I still learn.

True enough fico gives us limited information about their algorithms, however the way the scorecards are segmented is widely published by fico. The science used, regression, is also well known. However they give examples and they don’t give the actual thresholds that are the tripwires, as you call them. Now by testing we have found some of them and we have pretty good ideas about them. I’ll go over them for you once again.

Again, the first segmentation factor is clean/dirty. You can stay on a clean scorecard with one 30 day late. Anything more than that is believed to put you on one of the dirty scorecards.

You’re able to tell whether you’re on a dirty scorecard because they have different negative scoring factors listed when you pull a 3B or when you look at your negative reason factors on your Experian account. Please note the positive ones are totally meaningless.

This is also how we learned many of the scoring factors used on clean scorecards are not used on dirty scorecards. For instance, there is no new account penalty on a dirty scorecard, because new accounts are not a segmentation factor for dirty profiles. Likewise thin/thick and aged/non-aged are not segmentation factors on dirty profiles either. So there are some advantages to having a dirty profile. You can add revolvers without worrying about a new account penalty.

Following the clean path, the next segmentation factor is thin/thick. We don’t know where exactly the threshold is, but the common wisdom believes it to be around five or six accounts. So as long as you’ve got six or so accounts on your CR you’re good. Remember, a thin profile is higher risk and more sensitive than thick profile.

Next is aged/non-aged. There is much debate about where the threshold is for this. Some people like myself believe the lower end of the spectrum and posit around 10 years or less. On the other hand, some people believe it requires at least 15 years or more. (This goes by the age of your oldest account and is the reason you should always maintain your oldest account.) No one knows because this is especially hard to test because you can’t reverse the test for confirmation like you can for new accounts or utilization breakpoints, for instance.

Edit: We've now determined 3 years is the threshold for AoOA on FICO 8.

Last but not least is the presence of a revolver under 12 months of age. That is one we have been able to determine the threshold on for version 8.

The last segmentation factor is reversible for confirmation. That’s why it’s easier to determine and confirm. For instance, watch your fico 8s when your youngest revolver becomes 12 months of age. And then if you subsequently open another revolver, when it’s reported, you’ll again see the loss. So that’s how we determined that I believe.

So we’re pretty certain about what makes a profile clean or dirty and we’re pretty certain about the new account threshold. The others, granted we’re not certain about. But we’re pretty certain that if you have 6+ accounts, you’re considered thick. But 5 could be the number? 7?

Just remember this: a dirty profile is always worse off (score cap). A thin profile is more sensitive. A non-aged or young profile is more sensitive. And a new account profile is more sensitive. So IMHO, the least sensitive scorecard is going to be clean/thick/aged/no new account. The most sensitive profile is going to be clean/thin/non-aged/new account. And don’t forget the presence of a recent inquiry is also going to make it more sensitive no matter what clean scorecard, I believe.

You ask what do we look for, for a scorecard reassignment. Well, we look for a score change on not only the classic version, but also across the industry options. We look for score changes across different iterations of the algorithm, although I believe the new account threshold is different for the older versions. But that doesn’t mean the other thresholds are different, but you never know, they may be. That’s why each iteration must be studied independently, and it’s also typically a significant amount of points. We also look to see if they are crossing potential thresholds, such as 5 to 6 revolvers or 10 or 15 year mark for the oldest card and obviously when points are gained and lost in relation to adding revolvers. And negative reason code shifts, referenced above.

Does that help?

[Anonymous]

Hey @birdman7,

Super helpful.

Many thanks!

[Anonymous]

Since this is a master thread we might as well discuss something else regarding inquiries. De-duplication and buffering.

When you take an inquiry for a revolver the point loss is immediate. When you take an inquiry for an installment loan, the point loss is delayed or buffered for 30 days.

Additionally, to allow for rate shopping, installment loan inquiries allow you to only be charged for one HP scorewise though you may have several at a particular bureau. This only holds true if they are all within specific time frames. For EX2, that timeframe is 14 days. For all newer fico models the timeframe is 45 days.

So if you are shopping for an installment loan, it’s best to have all your HPs within 14 days if EX2 may be used. If it’s not a mortgage and you know EX2 will not be used then you have 45 days for all your HPs related to the installment loan, and fico scoring will only count them as one.

[Anonymous]

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@Anonymous wrote:
Since this is a master thread we might as well discuss something else regarding inquiries. De-duplication and buffering.

When you take an inquiry for a revolver the point loss is immediate. When you take an inquiry for an installment loan, the point loss is delayed or buffered for 30 days.

Additionally, to allow for rate shopping, installment loan inquiries allow you to only be charged for one HP scorewise though you may have several at a particular bureau. This only holds true if they are all within specific time frames. For EX2, that timeframe is 14 days. For all newer fico models the timeframe is 45 days.

So if you are shopping for an installment loan, it’s best to have all your HPs within 14 days if EX2 may be used. If it’s not a mortgage and you know EX2 will not be used then you have 45 days for all your HPs related to the installment loan, and fico scoring will only count them as one.

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Great add, @Birdman7.  Many thanks for making this a super useful and valuable thread.

I have read elsewhere that simulators in Experian and MyFICO are often not accurate.  I have noticed that since I took a recent INQ and new account that the simulator predicted maximum score in EX has been reduced by 10 points. Is that indicitive of a change in my scorecard, or should I just ignore the simulator?

[Anonymous]

@Anonymous IMHO, you are correct that the simulators are often not accurate.

However one big thing everyone typically thought was wrong on the simulators was that it didn’t take many points for opening an installment loan when you were in a no new account scorecard, whereas it would take 10 to 25 for a new revolver.

Well in my opinion, come to find out it was actually more accurate than we thought because IME, I found installment loans do not cause scorecard reassignment to a new account scorecard.

It’s fun to play with maybe, but I would not rely upon them in my opinion.

You’re not really giving me enough data to give a good answer as to whether the number may have been lowered as a result of scorecard reassignment. (Who knows really.)

In the simulator it allows you to choose the number of months, but you’re not telling me how many months you’re choosing.

What is the age of your youngest revolver/account and when you got that revolver, did you have one under 12 months of age at that time?

[Anonymous]

@Birdman7, when I open the simulator in EX, the default case is an amortization of your listed debt over 24 months. I am, perhaps incorrectly, intrepreting that the simulator result for that default case is now indicating, perhaps incorrectly, what my maximum possible score for FICO Score 8.

Since I openen my newest account, that default maximum is suggesting thta 850 is no longer possible within the next 24 month, and that 840 is now my theoritical new maximum.  Given our discussions on scorecard reassignments, is it accurate / reliable for me to interpret that my new account has caused FICO to algorithymically place me into a new scorecard? Or is the most sane action for me (and others) to merely ignore the existence of a simulator tab altogether?

[Anonymous]

@Anonymous Regardless of the simulator, if when you got your new revolver, you had no revolver under 12 months of age, you experienced scorecard reassignment into a new account scorecard and your resulting score was lower. (speaking of version 8 only in this post.)

Now, if your youngest revolver is for example 5 months old, if you adjust the “age your report” or “pay your debt every month” function to 7 months, you will see that’s the sweet spot where you get your points back, at 12 months AOYRA. Try it.

Play with it, at 6 months, you would not get that number of points, but at 7 you will get your reassignment points back. (Obviously you’ve got to adjust this to the number that would make your youngest revolver 12 months of age.)

You cannot necessarily draw any conclusions from the simulator, you cannot count on them. But sometimes they’re not that far off. For example it seems to get the reassignment correct, which you can see because if you age your report to 11 months AYORA vs 12 months AOYRA, you’ll see the points estimated jump.

Likewise, for those who have no revolving account, charge card, or line of credit under a year of age, they can simulate getting a card versus getting a loan and you can see the difference in point loss is significant due to the revolver reassigning scorecards where the loan does not. (Even though some people don’t believe this, even the simulator realizes it.)

So in sum, yes it is accurate and reliable for you to conclude your new account placed you in a new account scorecard IF at the time it reported you had no other revolving account under 12 months of age. This is accurate and reliable because of our knowledge of scorecard segmentation, not because of the simulator. The simulator will support this conclusion when you adjust it to make your current youngest non-loan account exactly 12 months of age, and you will see the points it awards at the threshold.

Last, when the simulator is left at the default of 24 months, you know it’s gonna include being reassigned to a no new account scorecard (assuming you’re already in a new account scorecard like you) because it’s assuming you do not open anything else. But remember, the threshold is at 12 months from your youngest non-loan account, not 24 months from today.

I would assume your theoretical maximum being lowered from 850 to 840 would be a result of the slightly lowered AAOA in the simulators estimated calculation, but who knows exactly how the simulator is programmed? that’s not something we study really; we study how the algorithm creates the score instead.

Hope this is helpful.

[Thomas_Thumb]

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@Anonymous wrote:

Hi Community members,

Across the forums, many similar questions exist about the score impact of inquiries. This is intended as a master thread for inquiry questions.

A brief background, especially to those new to these forums and credit scoring

There are several terms and slang related to an inquiry: INQ, credit request, hard pull, soft pulls, and HP. For this description, we will use inquiry. Simply, an inquiry is recorded on your credit report whenever an institution or person requests to review your credit record (most often to consider you for a loan, credit card, mortgage; less frequently for rentals or employment).  

There are 2 main classes of inquiries: those that affect your score, and those that do not.

Hard inquiries, or hard pulls of your credit, become a formal documented record that remains on your credit report for 25 months. A hard inquiry will impact your score. Hard inquiries occur when you apply for a loan, mortgage, credit card, or in some cases, when you request a credit line increase.

The focus on this thread is on those inquiry events that affect your score - hard inquiries.

Some quick facts about hard inquiries:

-they remain on your credit report for 25 months

-generally, you cannot dispute a hard inquiry (unless you can definitively prove is it a true error or fraud)

-will impact your score (sometimes but not always - installment loan inquiries are deDuped to count as one)

-the impact to your score lasts 12 months (could be less if an older inquiry ages off resulting in a different INQ bin)

-the impact on your score 'fades' and becomes less during the 12 month period after the inquiry occurs (not my experience)

-the magnitude to your individual score depends on your specific credit report

-generally, the older in age your credit report, the less the impact of an inquiry (not accurate. INQ saturation and recent new credit are often more influential)

-generally, the 'thicker' your credit report - the greater number of credit relationships, the less the impact of an inquiry

-when you have more than 1 active inquiry on your report, there are buckets, or brackets, that change the impact to your score

-generally, within 1 year (12 months) the score impact (score points lost) of an inquiry is earned back to have a 0 score impact.

-the effects of inquiries vary with scoring models (auto, mortgage, and earlier versions of FICO; FICO 10 effects are not yet known)

The impact and effect of inquiries is a complicated subject, and unique to each person and situation.  FICO (and others) does not provide an explicit explanation of the math behind inquiry scoring.  Keep in mind of all scoring impacts from your credit report, inquiry related ("seeking new credit") only accounts for 10% of a FICO score (55 points maximum).

---

I wanted to gain some insight into inquiries by evaluating some "what if" scenarios relating to new credit applications using the Fico simulator. This simulator allowed me to look at impact of inquiries on Fico 8 score by quantity, by credit bureau (EQ/TU/EX), by type of inquiry Mortgage (M), Auto (A), Student loan (S) and Other (O) where other is generally considered credit card applications and CLI requests that are HPs. Although it is often stated that the simulator is inaccurate on an absolute basis and can be misleading; looking at predicted results on a relative basis certainly has merit.

First a few notes on my file.

1) I have no inquiries under 12 months age on any of the three CRA reports.

2) The data on each CRA file is identical (same # of accounts, same account ages & currently same balances on each account)

3) AOYA = 8.5 years, AAoA = 20 years, AoOA = 36 years

4) One mortgage with B/L at 5.4%, 4 revolvers, 1 charge card, 1 AU revolver.

Below are some observations based on review of the data presented in the two summary tables (pasted below).

1. The simulations clearly show differences among the CRAs in treatment of inquiries - in other words the Fico algorithm has been customized for each CRA (otherwise results would be the same).

2. Experian score was insensitive to all inquiries regardless of quantity or type.

3. Maximum potential drop in score associated with adding inquiries was 20 points (Equifax and TransUnion).

 - Please note this simulation is looking at inquiries NOT new accounts.

4. Going from 0 to 1 inquiry had no impact on score for any CRA.

5. Going from 1 to 2 inquiries resulted in a 5 point drop on TU but no drop on EQ or EX.

 - #4 and #5 agree with actual CLI HP data from 2017/2018 [EQ (0) @ 850 => EQ(1) @ 850 => EQ(2) @ 850. TU (0) @ 850 => TU(1) @ 850].

6. Inquiries associated with installment loan applications were Deduped by loan category to count as a single inquiry for that loan category.

7. Mortgage HPs were not grouped together with Auto HPs or with Student loan HPs.

8. HPs associated with "other" are not Deduped - each one counts.

9. Saturation for HP inquiries was reached at a count of 5 (no further reduction in any CRA Classic Fico 8 score).

# INQ (other)	.EQ. Fico 8	.TU. Fico 8	.EX. Fico 8
1	850	850	850
2	850	845	850
3	845	840	850
4	840	830	850
5	830	830	850
6	830	830	850
7	830	830	850

#...INQ     M-A-S-O	..EQ.. Fico 8	..TU.. Fico 8	..EX.. Fico 8
1-0-0-0	850	850	850
1-1-0-0	850	845	850
1-1-1-0	845	840	850
1-1-1-1	840	830	850
1-1-1-2	830	830	850
2-0-0-0	850	850	850
2-2-0-0	850	845	850
2-2-2-0	845	840	850
4-4-4-0	845	840	850

[Anonymous]

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@Thomas_Thumb wrote:

---

@Anonymous wrote:

Hi Community members,

Across the forums, many similar questions exist about the score impact of inquiries. This is intended as a master thread for inquiry questions.

A brief background, especially to those new to these forums and credit scoring

There are several terms and slang related to an inquiry: INQ, credit request, hard pull, soft pulls, and HP. For this description, we will use inquiry. Simply, an inquiry is recorded on your credit report whenever an institution or person requests to review your credit record (most often to consider you for a loan, credit card, mortgage; less frequently for rentals or employment).  

There are 2 main classes of inquiries: those that affect your score, and those that do not.

Hard inquiries, or hard pulls of your credit, become a formal documented record that remains on your credit report for 25 months. A hard inquiry will impact your score. Hard inquiries occur when you apply for a loan, mortgage, credit card, or in some cases, when you request a credit line increase.

The focus on this thread is on those inquiry events that affect your score - hard inquiries.

Some quick facts about hard inquiries:

-they remain on your credit report for 25 months

-generally, you cannot dispute a hard inquiry (unless you can definitively prove is it a true error or fraud)

-will impact your score (sometimes but not always - installment loan inquiries are deDuped to count as one)

-the impact to your score lasts 12 months (could be less if an older inquiry ages off resulting in a different INQ bin)

-the impact on your score 'fades' and becomes less during the 12 month period after the inquiry occurs (not my experience)

-the magnitude to your individual score depends on your specific credit report

-generally, the older in age your credit report, the less the impact of an inquiry (not accurate. INQ saturation and recent new credit are often more influential)

-generally, the 'thicker' your credit report - the greater number of credit relationships, the less the impact of an inquiry

-when you have more than 1 active inquiry on your report, there are buckets, or brackets, that change the impact to your score

-generally, within 1 year (12 months) the score impact (score points lost) of an inquiry is earned back to have a 0 score impact.

-the effects of inquiries vary with scoring models (auto, mortgage, and earlier versions of FICO; FICO 10 effects are not yet known)

The impact and effect of inquiries is a complicated subject, and unique to each person and situation.  FICO (and others) does not provide an explicit explanation of the math behind inquiry scoring.  Keep in mind of all scoring impacts from your credit report, inquiry related ("seeking new credit") only accounts for 10% of a FICO score (55 points maximum).

---

I wanted to gain some insight into inquiries by evaluating some "what if" scenarios relating to new credit applications using the Fico simulator. This simulator allowed me to look at impact of inquiries on Fico 8 score by quantity, by credit bureau (EQ/TU/EX), by type of inquiry Mortgage (M), Auto (A), Student loan (S) and Other (O) where other is generally considered credit card applications and CLI requests that are HPs. Although it is often stated that the simulator is inaccurate on an absolute basis and can be misleading; looking at predicted results on a relative basis certainly has merit.

First a few notes on my file.

1) I have no inquiries under 12 months age on any of the three CRA reports.

2) The data on each CRA file is identical (same # of accounts, same account ages & currently same balances on each account)

3) AOYA = 8.5 years, AAoA = 20 years, AoOA = 36 years

4) One mortgage with B/L at 5.4%, 4 revolvers, 1 charge card, 1 AU revolver.

Below are some observations based on review of the data presented in the two summary tables (pasted below).

1. The simulations clearly show differences among the CRAs in treatment of inquiries - in other words the Fico algorithm has been customized for each CRA (otherwise results would be the same).

2. Experian score was insensitive to all inquiries regardless of quantity or type.

3. Maximum potential drop in score associated with adding inquiries was 20 points (Equifax and TransUnion).

 - Please note this simulation is looking at inquiries NOT new accounts.

4. Going from 0 to 1 inquiry had no impact on score for any CRA.

5. Going from 1 to 2 inquiries resulted in a 5 point drop on TU but no drop on EQ or EX.

 - #4 and #5 agree with actual CLI HP data from 2017/2018 [EQ (0) @ 850 => EQ(1) @ 850 => EQ(2) @ 850. TU (0) @ 850 => TU(1) @ 850].

6. Inquiries associated with installment loan applications were Deduped by loan category to count as a single inquiry for that loan category.

7. Mortgage HPs were not grouped together with Auto HPs or with Student loan HPs.

8. HPs associated with "other" are not Deduped - each one counts.

9. Saturation for HP inquiries was reached at a count of 5 (no further reduction in any CRA Classic Fico 8 score).

# INQ (other)	.EQ. Fico 8	.TU. Fico 8	.EX. Fico 8
1	850	850	850
2	850	845	850
3	845	840	850
4	840	830	850
5	830	830	850
6	830	830	850
7	830	830	850

#...INQ     M-A-S-O	..EQ.. Fico 8	..TU.. Fico 8	..EX.. Fico 8
1-0-0-0	850	850	850
1-1-0-0	850	845	850
1-1-1-0	845	840	850
1-1-1-1	840	830	850
1-1-1-2	830	830	850
2-0-0-0	850	850	850
2-2-0-0	850	845	850
2-2-2-0	845	840	850
4-4-4-0	845	840	850

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Hello @Thomas_Thumb,

Many thanks for remarks, insight and clarifications. 

Actual examples make advice more useful. The example of someone with an 850 score certainly makes me linger in a post and pay deeper attention to your words and insights. 

Thank you to you - and to @Birdman7 and all who have made this thread better and more factually correct. I will edit the intro post and update it with credit to each contributor so that any new visitor to this post reads correct information even if it is the only post in this thread that they read. 

Your generosity in sharing your wisdom makes these forums so valuable. My personal path has been enriched and improved by what I have learned here from voices and advice like yours. 

Thank you. 

[Anonymous]

Inquiry lab rat, reporting in.

Inquiries matter, but much less than the impact from new accounts.

My EX score just updated with the impact from a large card payment. My total utilization dropped from 7% to 3% and with utilization on hy highest UT card falling from 62% to 6%.

The impact to my EX score? 10 points. I expected to gain MANY MORE points.

For background, I have 5 inquiries over the last 5 months and 2 new accounts. The rest of my file is squeaky clean: an old (AoOA > 20 years) and thick file (15 open revolvers, 12 closed accounts including a mortgage and car loan) with a 100% clean payment record, all other cards below 9% utilization.  My score is 10 points away from my highest EX on record.

Historically, EQ has been my most tolerant bureau. TU has been my hardest, with consistently my lowest scores.  All scores are just over 800.

I will report once my other scores post.