The lowdown on credit inquiries

Dear Dr. Don,
I would like to know how many inquiries would be considered acceptable, or in an average range, on a credit report before it has a negative effect. Also, I have noticed that inquiries tend to stay on a credit report for years. How long are they required to stay on, and how can I have them removed? My credit score is 760. However, I have 10 inquiries on my report, with nine of them dating from 2001-2002. Thank you for explaining the mystery of inquiries. -- Jacci Jazzed

Dear Jacci,
There are two types of inquiries on your credit report: inquiries where you have applied for credit and inquiries where a business has pulled your credit report with a "permissible purpose" as defined by the Fair Credit Reporting Act. Your credit score isn't based on inquires not initiated by you, inquiries by employers or your own requests to see your credit report.

Whenever you apply for credit, that application stays on your credit report for two years. A history of declined applications makes you look desperate for credit. Lenders hate lending to desperate people.

Multiple approved applications send a different message. When you're approved for a loan or a line of credit, the lender has made a commitment to loan you the funds. Your ability to repay these lines and loans depends on your income. Your capacity to take on additional debt is diminished by the amount of debt or potential debt outstanding.

There are some twists and turns in here as well. A line of credit from a department store that hasn't been used in four years won't diminish your credit capacity as much as a VISA® card that's near its limit.

Comparison shopping for a secured loan, like a mortgage or auto loan, shows up as multiple inquiries but doesn't negatively impact your credit score as long as the applications are done within a few weeks of each other.

MyFico.com's discussion of credit inquiries provides additional depth on the subject . FICO doesn't use inquiries over two years old in computing a credit score.

The inquiries on your credit report from 2001 shouldn't be on the report, though my cursory review of the Fair Credit Reporting Act didn't find any language requiring the inquiries to drop off the report. Give the credit bureau a call and ask them why these inquiries are still showing up on your credit report. Bankrate provides the contact information for the three principal credit bureaus in its Guide to Managing Credit, but with a 760 credit score you don't need to be losing any sleep over these inquiries.