June 28th, 2013 by Jason M. Kaplan, Esq.
Credit Myth – Each credit pull hurts
Tags: credit score, FICO, inquiries
Credit Myth: “Every time I have my credit pulled, it lowers my score.”
Fact: Inquiries do not carry major weight in determining your FICO credit score.
There are two types of inquiries: ‘hard' and ‘soft'. A ‘Hard' inquiry occurs when a business requests your information for an application process, typically pulled by mortgage lenders, home sellers, and car dealerships. A ‘Soft' inquiry (foot print) occurs when your credit is checked for non-consumer based reasons, like when you request to check it.
* The “45 Day Rule” for inquiries: There is a 45 day buffer period that allows for customers to shop for items such as a home or car. The rule states, clients who have ‘hard' pulls of their reports to purchase a home or a car will only be charged with one inquiry, if all inquiries are performed within the 45 day buffer period. (*you have 45 days to shop for a home or car, without the inquiries affecting your FICO score)
Credit inquiries only count for 10% of your credit score. Remember 65% of your score comes from payment history and amounts owed. Focus on paying your accounts on time and leave a balance near 1% for greatest impact to your FICO credit score.
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