Inquiries matter because they are the only way anyone knows if you are actively shopping for credit. They are also the way to measure if you are excessively shopping or not. If it weren’t for inquiries it would be impossible to know if and when you are credit shopping.
In fact, it is a proven fact that consumers who are actively looking for credit or have excessively shopped for credit in the past 12 months are a higher credit risk than consumers who have not.
So, don’t credit shop ‘til you drop. The amount of credit shopping that you’re doing affects your credit scores. Every time you apply for credit, you give the lender permission to pull your credit report and credit scores. They leave behind a little bread crumb trail called credit inquiries each time they pull your report. This is nothing more than a record of who has accessed your credit report and the date. The more inquiries you have, the more it will hurt your score.
The credit score system is not designed to penalize you for credit shopping. You will be penalized, however, for excessively opening accounts. So be careful when you’re at the mall. Don’t ever use your credit report as a 10% off coupon — it’s never a good idea.
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