Inquires Affect Fico Scores?
Q: Does anyone know or care to comment on how credit report inquires affect FICO scores? It seems absurd that inquires be used at all in scoring. Say you obtain your credit report and this very act generates an inquiry. You find there is missing or incorrect data and over the course of several months fix and request reports. Then out of habit request reports on a monthly basis. But by making several requests/inquires, this would count against you. Why should it? Access to view your credit report should never be considered a negative. In another case, someone attempts to fraudulently apply for credit in your name. This generates an inquiry. Say they are not successful at obtaining a credit card, but yet the inquiry remains. Yet in another case, one or several of your credit lenders generates an inquiry to increase your credit limit or wants to review your credit history. Again, another inquiry. So...how do all of these inquiries affect your FICO score? If you're applying for a home loan, this score can mean a lot. Not only is it used for qualification, but a higher score may require less down or give you a better type of loan in some other way. This isn't right. Finally, if I can't calculate my FICO score, or any other score for that matter, by looking at my own credit report, how can this score be used to determine if I can get a loan or not. This is liking going to college, obtaining good letter grades but not know how to calculate your GP
A: -In fact, it is not. Inquiries that you make about your own credit report do not count. Inquiries that the credit bureau itself makes (in the process of investigating an error) do not count. "Annual review" inquiries--inquiries made by businesses that you already have accounts with, for the purpose of deciding what to do with those accounts--do not count. "Promotional" inquiries--where the company says "Sell us a mailing list of 10000 people who meet these criteria", without requesting specific individuals--do not count. These sorts of inquiries don't even show up on the credit reports that potential creditors receive. The only inquiries that show up on those reports are those that fall into none of these categories. (If you request your own credit report, it shows all inquiries, whether they "count" or not.) -I think the credit report should only include your actual CREDIT history, ie, how much you borrowed, and your payment history. It seems illogical to me to include _anything_ other than that -- it's not an FBI file or a character study, it's what you do with credit. How many times you apply for credit shouldn't matter. As long as you've demonstrated a willingness and an ability to meet your obligations. In fact, shouldn't a lot of credit applications without late/no pays mean that a person is a wise user of credit? Savvy financial expert who shops around and uses other people's money when he can? Or is that something that a lender doesn't like to see -- someone who borrows money, pays it off early and prevents the lender from charging sky-high interest rates? I can't imagine those "six months same as cash" lenders make a dime off of guys like the previous poster, only the people who turn it into an unsecured loan after the six months are up and pay loanshark rates. I suspect that credit agencies would include a host of other non-credit related information if they could get away with it, such as race, ethnicity, religious preference or any other demographic that could be correlated with profitable lending. And I suspect even more than it's about profitable lending -- someone with a history of paying off a loan at a steady, even rate. I've had bankers tell me that in the past they dislike it when people pay off loans early, as it cuts their profitability and the ability to repackage loans because they don't have a steady income or a stable life.
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