Why does my score change with inquiries?
An inquiry is a record that your credit report was accessed in response to an application you submitted. Inquiries provide insight into your financial situation that the rest of the report may not.
The primary reason inquiries influence credit scores is that they indicate you may have acquired new debt that does not yet appear on your report. Additionally, multiple applications within a short period of time may be a sign that you are having financial difficulties and are seeking credit to stay afloat, or to live beyond your means.
Lenders want to be sure you are not in danger of over extending yourself before agreeing to extend additional credit.
The overall impact of an inquiry on your credit scores depends on your unique credit history, but will always be small in comparison to other negative issues such as late payments or very high balances. The more recent the inquiry the greater the impact will be, but an inquiry alone will never be the reason for an application to be declined.
Federal law requires that inquiries be listed as a risk factor with your credit scores if they account for even a single point, so they are almost always included. But, inquiries are usually the last factor because they have the least impact.
Still, it is a good idea to be selective about applying for credit. You may not want to apply for new credit if you know you are planning to make a major purchase soon, such as a house or a car.
Thanks for asking.
– The “Ask Experian” team