June 8th, 2018 10:43 AM by Mike Herborn
Credit inquiries have little to no impact on your
score. They are the least important
factor in your credit score. The 3
bureaus confirm that borrower scores will not drop when a mortgage lender pulls
their credit more than once. It’s only
temporary drop and your score will be back up in 2-3 months.
The important concept is when someone is shopping for the
best rates and applies with several mortgage lenders, they won't get
"dinged" for multiple inquiries because the credit bureaus will lump
them into an inquiry during that short period of rate shopping. Credit scoring
models typically count mortgage, or auto loan, inquiries made over a short time
period, such as 2 weeks, to be one credit inquiry for credit scoring purposes.
Applying for multiple credit cards/loans in a short period
of time will have more of an effect on your credit score. Reason being, you will have the option to use
all credit cards that were opened, then with the mortgage applications, you will
only get an approved once.
Your credit score is made up of the following: payment history makes up 40% of your score,
while credit utilization is 20%. The length of your credit history contributes
21%, and a total amount of recently reported balances 11%. Finally, new credit
accounts are responsible for 5%.
Soft inquiry: Checking your own credit report with the major
credit bureaus will not lower your score.
If you apply for a job and they pull a credit report does not affect
Hard inquiry: Applying for mortgage loans, credit cards,
personal loans, auto loans are hard inquiries.
Credit inquiries do remain on your credit report for the
last 2 years.