A credit inquiry is an item on your credit report that shows when a business has requested a copy of your report.

Why It Matters: You should be aware that not every inquiry on your report affects your FICO, or credit, score. Learning which types of inquiries affect your score, and which ones don't, can help you understand and manage your score.

What You Need to Know:

·         Types of inquiries that count toward your FICO score are those that result from an application for new credit. Anytime you apply for a new credit card, loan, or other type of credit, the inquiry is added to your report and is counted toward your credit score. These are prompted by voluntary actions. You should know that new credit inquiries account for 10% of your total FICO score, and depending on the other elements on your credit report, a hard inquiry could cost you from 2-30 points off your score.

·         Types of inquires that appear on your credit report, but do not count toward your score are credit requests from businesses that want to offer you goods or inquiries from businesses with whom you already have credit but who want an update of your FICO score. Also included in this category are employers, utility companies, and auto insurance companies.

• Inquiries remain on your report for up to 2 years, however, only the first 10-12 within a 6-month period affect your score.

Steps to Take:

1. When shopping around for new credit, try to do it within a 14-day period. Multiple auto or mortgage inquiries made in any 14-day period are counted as just one hard inquiry.
2. Check your credit history from time to time to monitor your score and verify who is requesting your credit report
3. If you notice that there are unauthorized inquires reporting, dispute them with the credit bureaus immediately.
4. Try to limit how often you apply for new credit as these inquiries can affect your credit score negatively.
5. Do not apply for new credit during a home loan transaction. It could cause you to miss out on an affordable loan program.

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