 Multiple
inquiries and your credit score
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 Dear
Dr. Don,
If you contact four mortgage companies on the same day, will that
affect your credit score?
-- Andrea Aggregation
 Dear
Andrea,
Contacting four mortgage companies on the same day will affect your
credit score about as much as contacting one mortgage company. Actually,
it's not contacting them that affects your credit score, it's when
the companies request your credit report. That creates an inquiry,
and that inquiry stays on your credit report for two years, although credit scores only consider inquiries from the past 12 months.
Your credit score is based on the information in your credit report,
and that includes credit inquiries by you. When you're comparison
shopping for a secured loan, whether it's for a mortgage or an auto
loan, the credit scoring model doesn't aggregate these inquiries
to increase the impact on your credit score.
The following information comes from the myFICO
Web site and discusses credit inquiries and their impact on your
credit score:
Certain types of inquiries (requests for
your credit report) do not affect your score. The score
does not count "consumer-initiated" inquiries, requests
you have made for your credit report in order to check it. It also
does not count "promotional inquiries" (requests made
by lenders in order to make you a "pre-approved" credit
offer) or "administrative inquiries" (requests made by
lenders to review your account with them). Requests that are marked
as coming from employers are not counted either.
Do your rate shopping for a given loan
within a focused period of time. FICO scores, a scoring
model developed by the Fair Issac Corp., 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.
Fallacy: My score will drop if I apply
for new credit.
Fact: If it does, it probably won't drop much. If you apply
for several credit cards within a short period of time, multiple
requests for your credit report information (called "inquiries")
will appear on your report. Looking for new credit can equate with
higher risk, but most credit scores are not affected by multiple
inquiries from auto or mortgage lenders within a short period of
time. Typically, these are treated as a single inquiry and will
have little impact on the credit score.
So go ahead and do your comparison shopping, although I'd recommend
Bankrate
as the first place to go shopping for mortgage loans. Just try to
do the comparison shopping when working with lenders so it occurs
within a short time span, no more than two or three weeks, to minimize
the effect on your credit score.
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