How Many Inquiries Is Too Many?

While having a small number of hard inquiries on your credit report will only lower your credit score by just few points, going over a certain threshold and having too many inquiries in any given 12 months period impacts your score un-proportionally to the number of inquiries.

The reason for this is that researches have shown that opening (or looking into opening) several credit accounts in a short period of time represent greater risk, especially for people who do not have a long established credit history.

So exactly many inquiries is too many?
Unfortunately there’s no exact single number. It varies between people and their credit status.

What Fico score formula does is to profile consumers. For people with similar credit profile to yours, Fico formula sets a MAXIMUM number of credit inquiries that’s considered tolerable:

• If the number of inquiries on your file is smaller than this number, you may expect minimal impact to your Fico score (a few points).
• Exceeding the maximum number of tolerable inquiries will trigger a serious hit to your Fico score.

Again, it’s important to understand that the actual number of inquiries considered tolerable varies according to the different credit profiles people have. If the number of inquiries on your file exceeds this number, your score will take a hit and will be significantly lower compared to what you could have received with just an inquiry or two few less.

Additionally, a “Too many recent inquiries in the last 12 months” explanation text will attached to the explanation part of your credit report to indicate that you have exceeded the maximum number of hard inquiries considered tolerable.

As people change their credit habits – this number changes as well to reflect the reality.

Does Rate shopping hurt my credit?
No. Fair Isaac (the company that created Fico) recognizes the importance of rate shopping, and twicked the Fico score formula so that rate shopping doesn’t impact your Fico.

Specifically, the following exceptions are allowed:

• For mortgage, auto and student loan applications made in the 30 days prior to scoring – Fico ignores these inquiries, so that your score is not impacted while you’re in the process.
• After the 30 days have passed – multiple hard inquiries made within a period of 45 days are considered as a single hard inquiry. This means that no matter how many creditors you’ve authorized to access your credit information – it will have a negligible effect on your Fico!