Too Many Inquiries on my Credit Report

You may have looked at your credit report and seen the phrase “Too many recent inquiries in the last 12 months”. Looking at your credit report shows only a few inquiries; so why does it say that there have been too many – and how does this affect your credit score?

For any consumer, there is a specified number of inquiries allowable before it begins to negatively impact your credit score. Depending on the type of credit profile that you have, this number varies. If you exceed this limit, however, you will receive less points towards your overall credit score; and your report will indicate that you have too many inquiries.

If you are searching for new credit, then FICO can see this as a greater credit risk. This is why your credit score will count the number of inquiries. Inquiries are requests that a lender makes for your credit report or score when you apply for credit. FICO scores consider inquiries very carefully because some inquiries are not related to credit risk.

Just one credit inquiry will not have much of an impact on your credit score; usually five or less points will be deducted. Having a larger number of inquiries however can mean trouble for your FICO score; someone with more than six inquiries on their credit report within the last year is eight times as likely to file for bankruptcy as someone with no inquiries in the previous 12 months.

Your FICO score regarding inquiries takes into account the following:

Lenders know that people do tend to shop around for the most favorable terms on credit accounts, so this is taken into account. When calculating your FICO score, a distinction is made between trying to open multiple new accounts and shopping around for the best rate on just one account. Similarly, shopping for a single loan versus multiple lines of credit will be distinguished from each other, largely based on the time frame in which the inquiries are made. You can protect your FICO score when you are looking for a loan by shopping around for many loans in a short time (a 2 week period is ideal). Of course, you should be cautious here; opening multiple lines of credit in a short time can hurt your credit score, especially if you do not already have long established accounts.

Your FICO score takes into account the number of accounts you have, as well as the type. The time elapsed in between opening new accounts will also be considered.

While any inquiries made will remain on your credit report for two years, your FICO score only takes inquiries from the previous year into account. The most recent inquiries are considered to be the most important; FICO scores include only those inquiries which genuinely represent an increased credit risk.

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. It also does not count inquiries that 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 against you either.