The Thirty-Day Grace Period and Other Credit Inquiry Facts and Myths
By Robin Holland
Credit myths are common in the credit-reporting industry, and we often see them when consumers call us with questions:
Why did the credit-reporting agency deny my credit application?
Why did the credit-reporting agency change my score?
Why did the credit-reporting agency put false information on my credit report?
And then there are questions about supposed myths of the credit-reporting process. I recently received this comment, from Marcy, on a previous blog post:
I’ve been in the process of a refi. I have worked with 3 companies in the same 30 day period (I always get 3 quotes for any job). I always heard that if you have multiple inquires within a 30 [day] period for the same thing (refi) that the inquires would NOT affect your score. The last credit score I received a copy of, my score (Equifax) had dropped 10 pts, with Experian it went from 818 to 792-the reason “too many inquires…” Is the 30 day period a MYTH?
The 30-day grace period is not a credit myth. It’s probably a smart idea to compare rates and check out loan offers from several lenders before making a purchase of a car or a house.
Under normal circumstances, if you apply for a mortgage or an auto loan, any inquiries related to that application made within 30 days count as ONE inquiry. Even if you visit twenty lenders and all of them pull a copy of your credit report, those twenty inquiries should count as only one inquiry.
I don’t know what other activity Marcy has on her credit file, but some inquiries will affect your credit report differently:
Personal Credit Inquiry: If you pull your own credit report, it will not affect your score. You can check your credit report every single day, and it will not make a difference in your credit report or credit score.
Soft Inquiry: When someone other than you accesses your credit report, but you did not initiate the transaction, the inquiry doesn’t count against your score. One example is a promotional inquiry, in which a creditor or lender looks at your credit report in order to give you a new credit offer or a different rate. This promotional inquiry should show up on your credit report as a promotional offer, which makes it clear that you did not initiate the request. Soft inquiries don’t affect your credit score during a hard inquiry, which is when you give permission to a credit grantor to pull a copy of your credit report (see below). If you want to prevent creditors from accessing your credit report, you can opt out of these promotional offers.
Hard Inquiry: Any request for a copy of your credit file is an inquiry, but a hard inquiry is the only one that can affect your credit score. A hard inquiry is one in which a bank, a landlord, an a mortgage broker, or another creditor or lender accesses your credit file because of a transaction you have initiated.
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