A credit inquiry is an item on the credit
report that shows that a business has requested a copy of the report
before.



In your report you find out that there are number of credit inquiries,
by businesses that you don't even know. Don't get worried as all of these inquiries
don't affect your FICO score.

Which Inquiries affect the FICO SCORE?

The only inquiries that affect your FICO score are the ones that result when you apply for a new credit application. Examples are;


When you apply for a mortgage, auto
loan or any other loan, your lender is authorized to request a copy of
your report. This inquiry, as it is made by your action of filling an
application of loan, will appear on your credit report and is also added in
your FICO score.

Inquiries which are not included in FICO score

Your credit report contains all the inquiries that have incurred in the last
two years. When you request for credit reports to check for errors,
such inquires are not added in FICO score. In fact getting out a credit report
for error checking and accuracy is a very good idea. You will get up-to-date
about your current credit and can erase any error to improve your credit
history and FICO score. Inquiries are also made by the banks, credit card
companies to offer you services and by those businesses that you already have
accounts. Such inquiries are also not added into your FICO score.

How inquiries are added into FICO score

There are five factors in the history from which the FICO score is calculated. Credit inquiries fall under the category of "new credit" which is worth 10%. The information about inquiries that is added in the FICO score is;

• Total number of recent inquiries (such credit checks weigh down your score).
• The time since recent accounts were opened
• The time since a credit inquiry was made.

If you have few accounts or your credit history is not long, then inquiries
make a greater impact. People with six or more inquiries on their report
are eight times more likely to get bankrupt
then those people who have none.

How much a FICO score drops for new credit applications.

Sometimes an inquiry does not drop your score but there are others for whom a drop of 5 points may occur. If you apply for several cards in a short period of time, multiple inquiries appear on your report.



When you shop for mortgage or auto loan you ask multiple lenders for their quotes
and they request your report from the bureaus.
This adds multiple inquiries for a single loan in your credit report. To compensate
such a situation, inquiries for mortgage or loan made within 14 day period is
counted as one. Further more, the mortgage and loan inquires don't get added
into your score if they are made in 30 days prior to scoring. If you get a loan
in 30 days such inquires will have no affect on your score.