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A Credit Inquiry Only Impacts Your Credit Score by 0-5 Points?

Certified Mortgage Advisor
NMLS 1701021
February 14, 2020

Credit inquiry can impart your credit score

Let's talk about how much a credit inquiry impacts your credit score. So we hear this all the time when people are getting their credit pulled, whether you're shopping for credit cards or a car loan or a mortgage that they don't want to get their credit pulled.

Credit pull fear

That people don't want to get their credit pulled because they're afraid the inquiry is going to tank their score. We hear all these horror stories about getting inquiries and all of a sudden your score drops down like nothing else or auto lenders shop your loan around to different other lenders and then your score tanks.

What are the myths about credit inquiry?

So here's the truth there are a lot of myths surrounding credit inquiries in credit in general. So a credit inquiry is actually only going to drop your score by anywhere from zero to five points. That is the only amount of inquiry that is going to drop.

Hard pull

So let's talk about where this fear comes from and why we see this actually sometimes happen or we see some mild evidence of more of the fear side of this happening.

First, we need to understand what a hard pull is versus a soft pull. So Is where a lender is looking at all three credit scores. So you have your Equifax score, your TransUnion score, and your Experian score. So they're going to take a look at that place in an inquiry on your report, and they'll get to see your full credit report.

What this allows you to do is take a full application. So. Impossible to get approved for a loan of any sort without or maybe not impossible. It's difficult to get approved for a loan unless you have a hard inquiry there. It's going to give a lender the best view of your credit in places and inquiries.

Soft pull

A soft pull, normally only pulls one of those credit bureaus, so Equifax or TransUnion or Experian, is just one. It gives a limited view with partial information and does not place an inquiry on your report.

Credit alert service

So what we're mainly talking about are hard inquiries ones that actually play a full inquiry on your report. So what's going to end up happening is if you have a credit alert service, maybe something like credit karma, or I think there's another one called turbo. If you use one of these services, they're going to detect if inquiries happen on your report.

Alerts will save you!

What usually happens is they're going to detect an inquiry and all of a sudden send you an email saying, hey, just wanna let you know you got an inquiry. Then if you get to shop with auto lenders, multiple different lenders, or you shop with different people for mortgage loans. You're going to keep getting that same email. The reason why is because those scoring models that are used on a soft pull, things that Credit Karma is using are any of these alert sites. They're using soft pulls. These are different scoring models.

Difference between a hard pull and soft pull

So they're going to keep showing you that your score just dropped, your score just dropped. When in reality, that's not your real score. There is a difference between your actual real FICO score from a hard pull and the various other scoring methods that are used with soft pulls.

So you're going to get alerts and just know that happens and it's going to be okay. They're going to act like everything's falling down and that's just simply not the case.

New account? You're credit will drop

So something to know as well is that your credit score will drop if you open a new account. So this is most of the time what we see happen when people say I applied for an auto loan, they shopped multiple different auto lenders or auto loans.

New alerts: Inquiry

Then my score tanked and the real reason why is not because you had credit inquiries. The real reason why is because you opened a new account because when you open a new account, not only does that place an inkling.

Increases debt

It also increases the debt you have. So you have a higher utilization now because you now took on thousands of dollars more in debt.

Lower average age

You have a lower age of accounts, right? So if your credit average age was five years, you now just lowered it because you put a new account starting at zero. So those are all going to lower your credit score.

Payment history

You're going to get payment history and this new tradeline is going to help your score over time. But that's going to take time to be able to build your score back up.

New tradeline

So if you open a new account and your credit score goes down, it's because you opened a new account, you took on more debt, and you increased your credit utilization. It is not because of those inquiries.


The CFPB actually gives you 45 days to shop. The CFPB is the Consumer Financial Protection Bureau. They are the part of the government that represents you in interacting with lenders. They protect you from bad lending practices and make sure that you have a good lending experience. They're your advocate, whenever you're looking at any sort of extension of credit.

CFPB's 45 days

So they actually say that you have 45 days to shop per inquiry. So that means if you're shopping for an auto loan, you have 45 days to go place as many inquiries as you want. It's only going to count as one. Same thing. If you go apply for a mortgage, you can go for 45 days and apply for as many to as many different loan companies as you want. And it's only going to count as one inquiry within that 45-day frame.

Fear of hard inquiry is a miss of interest savings

Also, there's no point in saying, you know, fearing the danger of a hard inquiry in missing out on thousands of interest savings. Because here's the deal, if you have you just take the first quote when you apply, let's say you apply for a mortgage and you get a harder inquiry and you get the first quote and you say, I don't want to apply for any other loan to see what the quotes are because another inquiry is going to drop my score.

Well, you could have potentially missed out on thousands of dollars of savings on your interest payments by not shopping your mortgage around you have 45 days to do so with no penalty. So if you get one inquiry, you might as well go explore some other options because you know have a free 45-day window of inquiries that have the same type. So mortgage inquiries are one type auto loans are one type.

How inquiry works

So, this is kind of the way that the inquiries work. Let's say we have a green line as your credit score and your credit score right now are just pretty static. The moment you get an inquiry, that drop is probably going to be anywhere from zero to five points. You are in a flat line, and you can put in another inquiry and another inquiry and another inquiry, and you will see that it didn't continue dropping. It stays flat.

Your inquiry has the same weight

Because those inquiries all count and have the same exact weight as this inquiry. Then after your inquiries are done, your credit score continues to go back up.

Your credit is not fixed

Your credit score is always moving and evolving. It doesn't just drop down, and now it's there forever. If you get an inquiry, it might drop down again, zero to five points, and then it's going to build back up and you'll be okay.

Let's not fear credit

There's no point in freaking out over an inquiry because you're not continuing to always apply for credit every single day and every single month of your life, you only need it a few key times. So really inquiries are nothing to be afraid of. They're going to change your score by zero to five points. It's going to come back.

The thing that's going to bring your credit score down is opening a new account or some of the fear that comes from some of these soft reporting credit sites that want to continue to show you alerts. I feel like they're important, I guess so hope this helps you understand credit inquiries.

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Kyle Andrew Seagraves is Federal Mortgage Loan Originator (NMLS 1701021) licensed in all 50 states with the Dan Frio Team at Allied First Bank (NMLS 203463), an Equal Housing Lender. Separately, Kyle owns Win The House You Love LLC, an education company. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This website is only for educational usage. All calculations should be verified independently. This website is not an offer to lend and should not directly be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate, legal, and/or financial advice.

Allied First Bank is not affiliated with the VA, FHA or any other government agency. This site has not been approved by any government agency.
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