I just recently reviewed my FICO again, and one of my reason codes was 8. I read the information associated with this reason code and decided that with all of the recent questions pertaining to inquiries and their affect on your FICO that I would post what FICO actually had to say in regards to this. "Third Reason Code: 8 Your third reason code is 8, â??Too many inquiries last 12 monthsâ?. This reason appears when your credit report contains a large number of inquiries posted as a result of your applying for credit. Research shows that consumers who are seeking several new credit accounts are riskier than consumers who are not seeking credit. Inquiries are the only information lenders have that indicates a consumer is actively seeking credit. There are different types of inquiries that reside on your credit report. The score only considers those inquiries that were posted as a result of you applying for credit. Other types of inquiries, such as promotional inquiries (where a lender has pre-approved you for a credit offer) or consumer disclosure inquiries (where you have requested a copy of your own report) are not considered by the score. The scores can identify â??rate shoppingâ? in the mortgage- and auto-lending environment, so that one credit search involving multiple inquiries is usually only counted as a single inquiry. Typically, the presence of inquiries on your credit file has only a small impact on FICO scores, carrying much less importance than late payments, the amount you owe, and the length of time you have used credit. This reason rarely appears as a primary or secondary reason except in high-scoring files. As time passes the age of your most recent inquiry will increase, and your score will rise as a result, provided you do not apply for additional credit in the meantime. Typically inquiries are purged from the credit bureau files after two years. A common misperception is that every single inquiry will drop your score a certain number of points. This is not true. The impact of inquiries on your score will vary â?? depending on your overall credit profile. Inquiries will usually have a larger impact on the score for consumers with limited credit history and on consumers with previous late payments. The most prudent action to raise your score over time is by applying for credit only when you need it. " Erica
