Generally, higher number of inquiries is detrimental for your credit score, though many inquiries are deemed harmless.
The following are the various types of credit report inquiries and their impact on oneâs credit score.
Inquiries that have no affect on credit score
Inquiries on credit reports are performed, even if one doesnât apply for loan. Credit reports are checked by your potential employers, credit card companies check your credit history to approve credit card to you, and a customer can ask for his own credit reports. Under federal law, you are entitled to receive a free credit report copy from all three (Experian, TransUnion, and Equifax) credit reporting agencies every year via AnnualCreditReport.com.
However, these credit inquiries arenât that important, as they are hardly used to evaluate your credit score.
Increased credit report inquiries
When inquiries are made for approving credit application, then the inquiries are used to calculate your credit score. Lenders are interested in the frequency of applying for credit. If there are too many inquiries, then this may suggest that you are facing some financial issues.
Besides, paying your bills on time is also important. According to Experian, the credit reporting bureau, the numbers of credit report inquiries are seldom the prime reason your credit scores are so low. Inquiries tend to become important, when borrowers are missing their payments or have considerable credit card debt.
Shopping for multiple credit card rates donât hurt credit scores
In addition, when shopping for best rates in case of a mortgage, you may apply to many lenders with each one of them pulling your credit reports. Donât get worried as these multiple inquiries should not affect your scores. Many new credit score calculation models identify that youâre looking for the best available rates. So, for a specificÂ time frameÂ these multiple credit inquiries are counted as one or overlook them all.
However, if you are applying for multiple credit cards or for other types of loans, then itâs time for you to get concerned about your finances than your credit score. Consult a respected credit counselor to help design a manageable financial plan for you and avoid getting deeper into credit card debt.