Inquiry effect on scores

[Anonymous]

I realize that inquiries only stay on your reports for 2 years and do not affect your scores after 1 year. Does this mean that after 1 year, my scores will go up as though the inquiries never occurred, or does it mean they will stay status quo?

[OmarGB9]

Your scores wouldn't necessarily go up, however the effect of the inquiries lessens as time goes on up until they fall off. And lenders aren't as picky the older the inquiries are too.

[Anonymous]

Understood. Thank you.

[Anonymous]

Your score would go up, but how much depends. What it depends on is a variable of how many you have and how many fall off. For scoring purposes, you can consider them as falling off after one year. They do not actually fall off the report for two years, though they do not affect scores after the first year.

[Anonymous]

One thing I did not mention was the fact that after so many inquiries are acquired, they stop affecting your score. So the same would apply for them falling off. Until you got below the point where they stopped counting against the score, you would not see score increases. Once you past that point, you would start seeing score increases.

[Anonymous]

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@OmarGB9 wrote:
Your scores wouldn't necessarily go up, however the effect of the inquiries lessens as time goes on up until they fall off. And lenders aren't as picky the older the inquiries are too.

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Hi Omar.  Your reply suggests that an inquiry exerts an effect (if a small one) until it falls off the report   This is not exactly true.  The inquiries do not fall off for a full two years.  But any inquiry stops having any FICO impact after one year. You are correct that Vantage and some other models do count inquiries for a full two years.

A few qualifying comments to the OP:

Omar is right that you can't be certain that your score will go up immediately after a particular inquiry becomes 1 year old.  One reason is that there is some evidence (I am told) that FICO "groups" inquiries.  For example, for one scorecard on one model at one CRA, FICO might treat 0 or 1 inquries as the same, 2-3 inquiries as the next step up in penalty, etc.  Thus if you had 3 inquiries < a year old, and then one becomes greater than a year old, that brings you down to 2 inquiries with real impact.  But if your scorecard considers 2 and 3 inquiries as the same in penalty, you wouldn't see a benefit.  This is speculation, but there appears to be some evidence for it.

It's also not 100% clear the exact timeline for when an inquiry ceases to have FICO impant.  Is it exactly 366 days later?  13 months?  We had a discussion about this a month or two ago and nobody know for 100% certain, though the feeling was that 366 days was the most likely candidate.