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MissCamino

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Why does a credit inquiry effect my credit score negatively or at all?
I don't understand why when a company checks your credit why if effects your credit score? And why it stays on there for years?? Does this happen even if you have good credit??

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Hi MissCamino! I totally agree it's awful that just checking could impact our credit scores. Two things:

1. Only hard credit inquiries (not soft inquires) affect your credit score. They are reported to the credit bureaus and say on your report for years, like you said.

2. Hard credit inqueries can indicate that you are attempting to apply for new credit. There is predictive risk associated with this and default rate. In other words, statisticians have discovered that how often you apply for new credit has a positive effect on your loan default rate. The more often you check, the higher chance you'll default. Because of this relationship, hard credit checks is factored into your credit score. Separately, from personal experience I know that Comcast and rental agencies do a hard pull as well. In my opinion, this is completely unfair and shouldn't show up!

Hope this helps.

Inquiries may or may not affect your FICO score. A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries that can be factored into your FICO score includes:

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
  • Number of recent credit inquiries.
  • Time since recent account opening(s), by type of account.
  • Time since credit inquiry(ies).
  • A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit, inquiries from employers, or your own requests to see your credit report.

For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For others, one additional inquiry would take less than 5 points off their FICO score.

Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk: people with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than people with no inquiries on their reports.

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