The Effect of Multiple Credit Score Requests
- Every time you want to borrow money, whether as a mortgage, a personal loan, a car lease, a credit card or even a cell phone contract, the lender will run a credit check. A credit check tells the lender how likely you are to pay back the debt. Your credit history is summarized in a three-digit number --- your credit score. The higher the score, the more creditworthy you are. People with low credit scores find it difficult and expensive to borrow money.
- Each credit request affects your credit score by approximately five points. However, other things have a much greater effect. If you miss a repayment, your score will suffer. If you're more than 90 days behind, it can cost you as much as 100 points. If you've maxed out your credit lines, your score will also drop. Having a high debt-to-income ratio will hurt you more than a few credit score requests.
- You can check your credit score as often as you like without affecting it. You can get a free copy of your credit report online. The free report does not include the score, but it gives you an idea about the state of your credit history. If you want to know your exact score, you can get it from the bureaus for a fee.
- If you are in the process of buying a house, it's a good idea to shop around for the best deal on a mortgage. This will result in multiple credit score requests. You can avoid hurting your score by making all of your inquiries within 45 days. Then, they will count as a single inquiry. If you do apply for a mortgage, any inquiries made in the 30 days before the application will count as one.