A: Before answering this question, let me give you and others a little background.
Your credit scores (you have three, one each from the three major credit bureaus) can move up or down depending on several factors, such as paying your bills on time and how much debt you have outstanding.
Another factor that can impact your credit scores is applying for credit. When you apply for credit, you give the lender(s) permission to ask for or “inquire” about a copy of your credit report from a credit bureau. When they look at your credit file, that action is called a “credit inquiry.” These inquiries will be indicated in your credit reports. Multiple inquiries can negatively impact your credit scores. Looking for new credit can equate with higher risk, and higher risk means a lower credit score.
However, the credit scoring system takes into account that people often shop around for the best rates. So, if you are shopping for a good rate in a short time, your score isn’t likely to go down. That’s because most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders if you are searching for credit within a short period of time, according to Fair Isaac, the company that created the most widely used credit scoring model, FICO.
Depending on the version of the scoring model lenders are using, your scores won’t be impacted if you rate shop anywhere from 14 to 45 days prior to scoring. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your score.
The impact from applying for credit will vary from person to person, based on their unique credit histories, according to FICO. For most people, one additional credit inquiry will take less than five points off their FICO score. FICO scores range from 300 to 850.
And, your scores are not impacted at all if you pull your own credit report.
Now, as for when an insurance company pulls your credit reports, that action will not impact your credit scores, according to Bradley Graham, senior director of Scores product management at FICO. It’s considered a “soft” inquiry.
Graham said FICO’s scoring models for both credit risk scores and credit-based insurance risk scores ignore all credit inquiries by insurers, period. The only credit inquiries that either type of FICO scoring model will consider are lender inquiries for one’s credit report or score that are triggered by the consumer’s own pursuit of new or additional credit. All other inquiries are ignored.