CONSUMER CREDIT;

CONSUMER CREDIT;

You asked whether inquiries made to a credit reporting agency lower a consumer’s credit score.

SUMMARY

We checked the websites of the three major credit reporting agencies, Experian, TransUnion, and Equifax, and found that their answers differed somewhat as to what impact inquiries have on consumers’ credit scores. The bottom line appears to be that inquiries can negatively affect one’s credit score, but are rarely, if ever, the main cause of a bad credit score. We have attached the information from each of the websites for your reference.

EXPERIAN

According to Experian (http: //www. experian. com/), certain inquiries can affect a person’s credit score. Its rationale is that recent inquiries can show that a person has outstanding accounts that are not yet part of the credit report. The more inquiries that appear on a borrower’s credit file, the more likely it is that he may not be able to pay his bills as agreed. But Experian stresses that inquiries have a very small impact on a person’s credit score, and are rarely, if ever, the only reason for poor credit scores or being refused credit. According to Experian, credit scores only consider inquiries initiated by the consumer in regard to certain transactions, including mortgage, credit card, and auto loan applications. Inquiries that do not affect scores include those by: a consumer for his personal report, lenders using credit information for account review purposes or “preapproved” credit offers, or prospective employers for use in making employment decisions. Inquiries not impacting risk scores are shown only on the credit report a consumer requests directly from Experian.

TRANSUNION

TransUnion (http: //www. transunion. com/) takes a somewhat different approach. It says that inquiries are recorded on a consumer’s credit report every time he, one of his creditors, or one of his potential creditors obtains a copy of his credit report. But it disputes the common notion that every inquiry decreases a consumer’s credit score by a certain number of points. Instead, it says, the presence of inquiries typically has only a small impact on a consumer’s credit score, while certain types of inquiries have no impact at all (it does not specify which inquiries fall into which category). And TransUnion says inquiries are usually more important to a credit score if the consumer has a limited credit history.

EQUIFAX

Equifax’s website (http: //www. equifax. com/) had the least information on this subject. But in a section listing the top 10 ways to improve your credit score, it suggested not applying for multiple credit cards over a short period of time, or for a card you are not likely to get. This, it said, would minimize the number of inquiries on your credit report, which suggests Equifax considers inquiries as having a negative impact on a consumer’s credit score. It did not elaborate on this subject.

JG: eh