When you apply for credit, you authorize those lenders to ask or "inquire" for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. The only inquiries that count toward your FICO Scores are the ones that result from your applications for new credit.
It's important to know that there are 2 types of credit inquiries. Soft inquiries that can result from activities such as viewing your own credit report which will not affect your FICO Score. Hard inquiries such as actively applying for a new credit card or mortgage which will affect your score.
Here are some examples of soft and hard inquiries...
Examples of hard inquiries:
FICO's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO Scores can be lowered as a result. Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years.
For example: If you are apply for several credit cards within a short period of time, multiple inquiries will appear on your report. So remember that looking for new credit can equate to a higher risk. However, most credit scores are not affected by multiple inquiries when it is coming from an auto, mortgage, or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.
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