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The Truth about Multiple Inquiries

Friday, July 12, 2013 - A common question I receive from clients and industry professionals alike is the age old question about grace (or shopping) periods, associated with multiple credit inquiries. The fact of the matter is every time, and I repeat EVERY time you pull a credit report for the sake of securing a type of financing, your score will drop between an average of 2 and 5 points. In a mortgage industry, you will not see the drop in your Fico Score right away because of the mortgage formulas that calculate your FICO score, have a 30 day “duplication” window on multiple inquiries.

Example: If you pull your credit report with 5 lending companies in the span of 30 days, you will only be negatively affected by that first inquiry for that 30 days of 2-5 points. However, when day 31 rolls around, ALL 5 inquiries are now affecting your credit score! A penalty of 2-5 points for the first 30 days can turn into a 10-25 point penalty for those inquires in that month. Before you shop around, think of the long term consequences that could affect your score as once an inquiry posts on your credit report, it will continue to affect your Fico score for 12 months and then will not be used in the calculations thereafter.

Please remember that there are many different mathematical algorithms with pulling your credit report in many different industries and the above example is a common formula used in the mortgage industry.
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