How Do Credit Inquiries Impact Your Credit Score After Bankruptcy?

Credit inquiries have only a small effect on your credt score. Here's how it works.

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A credit inquiry is a notation on your credit report that someone requested or viewed your report. Too many credit inquiries on your credit report will hurt your credit score. If you've filed for Chapter 7 or Chapter 13 bankruptcy and are now trying to improve your credit score, take care not to have too many credit inquiries on your report.

Types of Inquiries on Your Credit Report

There are generally two types of credit inquiries that appear on your report.

Soft inquiries. The first type, often called soft inquiries, are only viewable by you, not by creditors or others looking at your report. These inquiries include creditors that request your report for promotional purposes (like preapproved credit cards), current creditors reviewing your report, and when you request a copy of your own report.

Hard inquiries. The second type of inquiry, often called a hard inquiry, is seen by creditors and employers that request your credit report. These include inquiries when creditors request your report because you have applied for credit with them. 

Credit inquiries appear on your report for about one year after the inquiry was made.

How Credit Inquiries Impact Your Credit Score

Soft inquires do not affect your credit score. Too many hard inquiries, however, may lower your score. This is because more than a few hard inquiries make you look desperate for credit.

Keep in mind, though, that according to Fair Isaac (the maker of your FICO score), credit inquiries only comprise about 5% of your overall score. So don't become overconcerned about inquiries.

How to Avoid Excessive Credit Inquiries

The obvious way to avoid excessive credit inquiries is to refrain from applying for credit unless you believe you have a good chance of getting it. As a general rule, this means don't shop for credit within six months to year after filing bankruptcy. Most lenders will not lend to you before this time.

Also, beware of creditors that look at your credit without you realizing it. For instance, used car dealers often try to get customers to sign a form allowing them to pull your credit report (this helps them decide how to approach the sale). Don't agree to this unless you are serious about buying a car with the dealer. 

More Ways to Build Good Credit 

There are many other things you can do to start rebuilding your credit after bankruptcy. To learn more, see Life After Bankruptcy.

by: , J.D.

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