Effects of too Many Inquiries on Credit Reports

Soft and Hard Inquiries

Inquiries made on your credit forms part of the information you should expect to see on your credit report. But if you are the type that doesn’t care to ask about your credit report, you may not know how many inquiries that appears on it. You can’t just assume that there will not be any inquiry on your credit report. Inquiries can appear on your credit report for different reasons.

Below are some of the reasons enquiries can be made on your credit.

Application for credit card

Each time you apply for credit card, the card issuer will definitely make an inquiry on you credit. The credit card company will like to know the number of cards you are already having and whether you carry balance in any of the cards. If you carry any balance, how much is involved and for how long have you been carrying the balance? How much do you pay monthly? Do you make minimum payments? Is there any record of delayed or missed payments? If there is, you can expect to see such record to stay on your credit report for up seven years. However, if you are few days delayed in making payment and you have been able to rectify it and you have been paying regularly for six month, you can discuss with your card issuer to write to credit bureau agencies to withdraw the late payment report for you.

Application for loan

If you are seeking for loan whether mortgage loan, auto loan or any other personal loan, each financial institution you contact will make enquiry on your credit. However, if you shop for the same loan within a short period of time, it may not be counted as multiple applications which may make multiple enquiries appearing on your credit report. When you apply for loan online on websites that compare loan interest rates, they may send your information to different financial institutions. In this type of situation, the credit bureau agencies may treat all enquiries from the lenders as one.

Application for Insurance

Whether you want to be paying your premium monthly, quarterly or yearly, insurance requires that you pay your premium on a regular basis. That is why insurance company usually place inquiries on the prospective and existing customers.

Above are reasons among others you can find inquiries on your credit report. Inquiries are normal when they are few. But if you are having too many inquiries on your credit report, it can signal a red flag to lenders or other financial institutions.

Read Also: How Long Do Hard Inquiries Stay On Your Credit Report

Below are the ways lenders can interpret too many inquiries on your credit:

  • Rejection of application for credit card: Too many inquiries on your credit may suggest to the card companies that you applied for credit cards and you have been turned down severally. Hence, this might be the reason you continued to apply. And each time you apply, an inquiry is sent to the credit bureau agencies. So, in order to avoid card rejection, it may be better for you to request for your credit report on your own. You can get one free credit report from the three credit bureau agencies every twelve month. If you have your credit report, you will be able to review it and check for possible errors and mistakes.
  • Rejection of loan application: Too many inquiries on your credit report may be interpreted to mean that lenders are turning down your application for loan.
  • Others: Other ways people can interpret inquiries on your credit report is the tendency for you to want to embark on many purchases within a short period of time. It can also be seen as an attempt to borrow in order to pay off debts.

The conclusion is that, too many inquiries on your credit report can lead to the rejection of your application for credit card or loan. If you were granted, it may be at a very interest rate. Ultimately, hard inquiries can lower your credit score. The less the number of inquiries you have, the better.

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