Why Inquiries Matter
New credit is one of the factors used to determine your credit score. In
fact, new credit accounts for 10 percent of your credit score.
Hard inquiries are considered a subset of the new credit category.
According to Fair, Isaac & Co., the information about inquiries that
can be factored into your FICO score includes:
- the number of recently opened accounts that you have and the proportion
of accounts that are recently opened compared with long-standing accounts,
by type of account;
- the number of recent inquiries;
- the time since recent account openings, by type of account; and
- the time since you last had any credit inquiries.
As Fair, Isaac & Co. writes on its Web site:
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.
According to Fair, Isaac, 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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