Debt Consolidation Credit Counseling In Phoenix

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?

Depending on your exact credit profile, there are a specific number of permissible inquiries which can be made before your credit sore begins to suffer as a result. Going over this limit will prevent you from having as high of a credit score as you could otherwise have, as well as the notification on your credit report that you have had too many inquiries.

Seeking out new lines of credit is considered to make you a higher credit risk, which is why the number of inquiries made is factored into your FICO score. Each inquiry is a request for your credit report made by a lender. However, not every inquiry is considered to be a factor in your creditworthiness, so FICO scores examine each inquiry carefully.

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.

When determining your FICO score, this is how inquiries are factored in:

FICO scores know that people shop around more these days for credit, so they do take that into consideration and will distinguish between a search for many new credit accounts and rate shopping for one new account. FICO scores usually will distinguish between a search for a single loan and a search that you do 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. But be careful, because some research shows that opening too many credit accounts in a short period of time can increase your risk of hurting your score- especially if you don't already have some well established accounts that provide great length of history.

The number and type of accounts which you currently have open will also be considered when calculating your FICO score, as well as how much time has passed in between opening new accounts.

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.

Your FICO score will ignore many inquiries entirely. These inquiries include your requests for your own credit report and score from the credit reporting bureaus, inquiries made when making a pre-approval and inquiries made as part of an employment screening process are also ignored in terms of your FICO score. All of these inquiries will appear on your credit report, but do not affect your score.