How is A Credit Score Calculated – Chapter 2: Credit Inquires

credit-report-inquiries

This next chapter is on the effect of credit inquires on your credit.

What is a Credit Inquiry?

Every time you apply for any sort of credit, that company will request your credit history with the three bureaus. That is a credit inquiry.

 

Looking for new credit is equated with a higher risk. Most people who look for more credit, likely has maxed out their other cards. Statistically speaking, those with six or more inquiries tend to be eight times more likely to file for bankruptcy.

Difference in Inquiry?

Not all credit inquiries are treated equally. Generally, rate-shopping inquiries like mortgage, auto and student loan inquiries are not treated as negatively as perhaps a credit card credit inquiry. The idea is that when you are shopping for those types of loans, you may have several inquiries from companies because you are shopping for the best rate. A lot of times if you have rate-shopping inquiries older then 30 days on your score and a recent one within the last 30 days, your score will only be effected by one inquiry.

Compared to the other factors your score is based on, this one will tend to be the least effect. It is of course dependent on each person’s particular situation.

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