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The Effects Of Multiple Credit Inquiries On Your Scores

Credit inquiries impact credit scores negatively because statistical studies show that multiple inquiries are associated with high risk of default.

Distressed borrowers often contact many lenders hoping to find one who will approve them. On the other hand, multiple inquiries can also result from applicants shopping for the best deal.

To avoid penalizing loan "shoppers," credit ratings ignore inquiries that occur within 30 days of a score date.

Suppose, for example, I shop a lender on June 30 and the lender has my credit scored that day.

Even if I had shopped 50 other lenders in June and they had all checked my credit, none of those inquiries would affect my credit score on June 30.

Inquiries from May and back 11 months would, however, be counted on June 30.

To avoid biasing the credit score from earlier shopping episodes, the scorers treat all inquiries


that occur within any 14-day period as a single inquiry.

If you shopped 50 lenders during June 1-14, they would count as one inquiry. If you spread them over June 1-28, they would count as two inquiries.

You will damage your credit if you spread your loan shopping over many months.

But, because the market can change from day to day, it makes little sense to do this in any case.

Circumstances can cause a consumer to shop, drop out of the market, and return later when conditions are more favorable.

You minimize the adverse effect by concentrating each shopping episode within 14 days or less.





About the author:

Gus Skarlis is one of the leading loan officers because of his expert knowledge in loan placement as well as credit issues. To contact him call 702-491-7251 or visit his very informative site at: http://www.GusSkarlis.com