How many points will a hard credit inquiry cost you?
How much can a hard credit inquiry hurt?
Well normally it’s not a whole lot but in certain situations, it can actually be a forty or fifty point drop. What I recently found was a credit file that actually had a forty point drop in the credit score from just an inquiry.
Hi everybody Dave Sullivan here from The Credit Guy TV. As I was reviewing this credit report trying to figure out why the credit score dropped so much? It turned out that it was very easy to identify, because it was a very thin credit history. There were only two open active accounts and they were both installment loans.
One installment loan had a “current was thirty” and the other one was just a current account, It was never late. The report did have a thirty day late on one of the two installment loans although because it was so long ago it didn’t have an actual date. As you know once you become “current was” your kind of stuck on that status forever.
There were no revolving accounts on this credit file and normally mix of credit is not really important to get a high score. In this type of credit file had a low 700 credit score. The credit score dropped down 40 points from 711 as you know given the current state of the mortgage industry forty points is a big deal, it can really change your rate.
The loan officer asked for my advice, I found it interesting because there were no revolving accounts on the report to offset the inquiry. That hard credit inquiry really brought the credit score down.
Here is why;
They had two mortgage inquiries on the credit report. The mortgage inquiries were there but because it hadn’t aged out of the thirty day no impact window. It didn’t have any negative impact on the score at that time but the additional pull was less than 30 days old.
By the time the third pull was outside of that thirty day window so now those two mortgage inquiries counted. Even though they counted as one because they were like inquiries and group together. The inquiries now counted on the credit file dropped the credit score forty points.
If you are working with borrowers and they in the low 700 credit score and they have a thin file, you need to be aware that multiple inquires outside of the initial thirty day window could severely negatively impact that credit score. For more information amount inquiries and how they impact the score. Watch this video.
If you’re looking for other ways to improve your credit score please go to GetLoanReady.com you can get free videos and worksheets to increase your credit score from a more holistic perspective. Never Pay Collections
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