 Multiple
inquiries hurt credit score
|  Dear
Dr. Don,
Last year, I was shopping for a
home loan through a mortgage broker. Now my credit reports show
nine hard inquiries from various lenders. All have request dates
within a four-week time period. Some of the lenders are even listed
twice with different contact addresses. They also indicate purpose
type as being used for a credit transaction rather than for a mortgage
loan.
I was under the impression that similar requests were
grouped as one or two inquiries. Plus, I was not aware I was being
shopped to so many lenders. My credit reports indicate that this
has indeed affected my score. Can this be corrected? How? --
Nick Numerous
 Dear
Nick,
When you apply for a loan, the lender reviews
your credit score and reports to one or more consumer reporting
agencies, or CRAs, and it registers as a credit inquiry on your
credit report with that CRA. Every lender could have requested a
credit check with each CRA. Three loan applications could easily
generate nine credit inquiries between the three CRAs. A mortgage
broker will shop for a loan that's right for you, so multiple loan
applications are expected. Asking the broker to limit the number
of inquiries on your credit report doesn't really make sense.
The information in your credit report is used to calculate
your credit score. Multiple inquiries for a secured loan, like a
car loan or a mortgage, made within a short period of time aren't
supposed to hurt your credit score, because it's clear that you
are comparison shopping. Here's what the myFICO.com Web site says
about multiple inquiries for secured credit:
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.
And:
Looking for a mortgage or an auto loan may cause multiple lenders
to request your credit report, even though you're only looking
for one loan. To compensate for this, the score counts multiple
auto or mortgage inquiries in any 14-day period as just one inquiry.
In addition, the score ignores all mortgage and auto inquiries
made in the 30 days prior to scoring. So, if you find a loan within
30 days, the inquiries won't affect your score while you're rate
shopping.
Fair Isaac & Company, or FICO, works with all
three CRAs in computing their credit scores. A credit score from
Experian is called an Experian/Fair Isaac Risk Model, a credit score
from TransUnion is an Emperica® score, and a credit score from
Equifax is known as a Beacon® score. So if myFICO reports that
multiple inquiries aren't impacting your credit score in shopping
for a mortgage you should be able to rely on that assurance.
Your credit report wouldn't show that these inquiries
hurt your credit score; it's the credit score that reports the top
positive and negative factors affecting it. If nothing much else
is going on in your credit report these inquiries would show up
as a factor without any specific notice of how they impacted your
current credit score.
It will be an uphill battle to dispute the inquiries
on your credit report. If you applied for credit and the lender
reviewed your credit report, there's not much to dispute. It's not
always possible from the inquiry information to determine whether
a lender is considering you for a mortgage or a credit card. In
writing this reply I reviewed the inquiries on my Experian credit
report and couldn't distinguish between mortgage and unsecured credit
requests.
You can go through the dispute process and try to
have the reason for the inquiry included in the inquiry, but I can't
handicap your success with this type of dispute. If you disagree
with the results of a dispute you are entitled to include a personal
statement on your credit report, and you can use that opportunity
to explain the reason for the multiple inquiries. Bankrate provides
a guide
to the dispute-resolution process.
Credit inquiries stay on your credit report for two
years, but it won't take two years for your credit score to start
to recover from these multiple hard inquiries from last year's mortgage
shopping.
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