Hi Chris and thank you for acknowledging my answers as I try to help as many people as possible. In regards to your question I will let you know upfront that I leave credit to the experts. I have had this question come up a million times before and I always go back to an article that Dave Wheeler, a Credit Expert from the company Credit Plus Inc. referred me to and here is what it says- I will also send this conversation to Dave and ask him to respond here so that we can get the best and most up to date answers regarding credit. I hope this helps and I am always here to help!
A search for new credit can mean greater credit risk. This is why the FICO score counts inquiries - requests a lender makes for your credit report or score when you apply for credit. FICO scores consider inquiries very carefully as not all inquiries are related to credit risk. There are three important facts about inquiries to note:
Inquiries usually have a small impact. For most people, one additional credit inquiry will take less than five points off their FICO score. However, inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also means greater risk: people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their report.
Many kinds of inquires are ignored completely. Your FICO score does not count an inquiry when you order your credit report and score from a credit reporting agency or from our site, http://www.myfico.com.
Also, the FICO score does not count inquiries a lender has made for your credit report or score in order to make you a "pre-approved" credit offer, or to review your account with them, even though you may see these inquiries on your credit report. Inquiries that are marked as coming from employers are not counted either.
The score allows for "rate shopping". If you're looking for a student loan, mortgage or an auto loan, you may want to check with several lenders to find the best rate. This can cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. When you need an auto or home loan, you can avoid lowering your FICO score by doing your rate shopping within a short period of time, such as 14 days.
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