Applying For New Debt, or Inquiries
Accumulation of new debt is the remaining 10% of your credit score. It is comprised of how much new debt you are applying for. It takes into consideration how many accounts you currently have open, how long it has been since you opened a new account, and how many requests (Inquiries) you have for new credit within a 12 month time period. If you go out today and apply for credit, that creditor requests information from the Credit Bureaus. This counts as a Hard Inquiry on your report. If you have a lot of Inquiries in a short period of time, your scores will be impacted. If you request your own report, that is considered a Soft Inquiry and doesn’t count against your score, or show up on your report.
If you apply for a mortgage today, your scores might drop 1-4 points. But, if you apply for a car, a mortgage, and a few credit cards this week, your scores could drop significantly. The same applies if you have 12 car dealers pull your credit, OR if 1 dealer has 12 banks pull your credit. A lot of credit pulls in a short period of time will have a great impact on your scores. Don’t apply for too much new credit in a short period. And don’t let a lot of different creditors pull your report while applying for big purchases. You are allowed 3 Inquiries per Bureau, per month before your credit score takes a hit. As they say, “Don’t spend them all in one place.”