Is a Credit Inquiry the Same if You're Approved or Denied?

A reader wrote in this week with the following question about credit report inquiries:

I was wondering: when a person is applying for a credit card and a hard inquiry is done on your credit file, does your FICO score go down even if are approved or does it go down only if you are denied? Curious??!!

The credit inquiry impact on your credit score does not change if you are approved or denied. Basically, all an inquiry does is record the fact that your credit was pulled for the purpose of a credit application. There is no record with the inquiry of you being approved or denied for the credit card or loan.

Inquiries are used in credit scoring formulas to track how frequently you apply for new accounts. Too many applications for credit and you are considered to be a greater credit risk. Applications for credit add instability to your credit and credit scores hate instability.

Damaging hard inquiries only occur when you apply for a credit or loan account. You'll receive a soft inquiry when you check your credit yourself or when your credit is checked for a pre-approved offer. Soft inquiries don't hurt your credit score.

Ironically, your credit score will likely be more damaged if you're approved for the account than if you're denied. If you are approved, you'll have the damaging hard inquiry plus some damage in the credit age category resulting from having a newly opened account. Your credit score will improve as you use the new account responsibly.

You can learn more about inquiries in this expert article from FICO insider, John Ulzheimer.

Emily Davidson – Credit.com's financial expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[Edgar]

A certain company in San Ramon California is running unauthorized Credit Inquiry on their deliquent customers. They are probably thousands of customers that does not know that this company (Nextfocus Inc.) is amking an inquiry on their credit. Aside from this, the company is also making unauthorized charges of credit card of their employees. I thought they should not be keeping the credit card numbers of their clients.

[kdl40z5500]

I hate credit card companies.