A credit inquiry typically lowers your score by five points or less. Credit inquiries reduce credit scores because lenders believe that multiple inquiries are associated with high risk of default.
Every time you apply for credit and the lender checks your credit report, a credit inquiry is placed on your credit report. In addition, credit inquiries stay on your credit report for 24 months, but are only calculated into your score for 12 months.
The inquiries section of your credit report contains a list of everyone who accessed your credit report within the last two years. The report you see lists both voluntary inquiries, spurred by your own requests for credit, and involuntary inquiries, such as when lenders order your credit report to offer you a pre-approved credit card.
Inquiries are a subset of the "new credit" category, which accounts for 10% of the total score. Their importance depends on the overall information in your credit report.
Many people take the advantage of comparison shopping when obtaining a loan. Credit inquiries will not significantly impact your credit rating if you do all your shopping in a short period.
The FICO scoring model includes all inquiries for the same type loan within that 30-day period as one inquiry, not multiple inquiries. Recently, the 30-day rule was extended to 45 days in a new version of the FICO scoring system. With VantageScore they will consider all inquiries for the same credit within a 14-day period as one inquiry.
Credit inquiries are included in the new credit portion of the scoring model for both FICO and VantageScore. Each scoring model weights new credit as 10 percent of your total score. Credit inquiries are just one item considered in the new credit category. Recently opened credit accounts are also included when calculating this portion of your score.
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