No consistency on inquiries
And different credit entities will treat the inquiries differently. It isn't consistent across the board, says Watts. (Bureaus also calculate and sell other types of credit scores that aren't based on the FICO model.)
With FICO scores, each bureau calculates its own version of your score, based on the information reported to it. But some will count multiple inquiries made within a short period of time for a student loan as one. Others won't.
"The way the inquiry is coded determines how the FICO score treats the inquiry," says Watts.
In addition, for those who have spotty credit or little experience with credit, those inquiries "may have more impact," says Watts.
But lenders aren't looking for a long credit history with student borrowers, says Harrison Wadsworth, special counsel to the Consumer Bankers Association, an industry trade group. With students, "they're expecting a very thin file," he says. "What they would want to see is nothing adverse."
The average undergrad covers about 7 percent of tuition through private student loans, says Martha Holler, spokesperson for student loan lender Sallie Mae. Students themselves take out more than two-thirds of the loans, while parents account for roughly 29 percent, according to Sallie Mae/Gallup data.
FICO has no plans at present to change the scoring formula so that it automatically groups student loan inquiries as one, says Watts. The purpose of the score is to predict how likely a person is to honor (or walk away from) debt, he says.
"If we go in and start fussing around with the formula based on sociology or politics, the predictive ability would likely drop," he adds.
But not everyone agrees.
"The problem is that student loans aren't analogous to credit cards," says Luke Swarthout, a higher education advocate with the U.S. Public Interest Research Group. "People don't take out multiple student loan accounts the way they might take out multiple credit card accounts."