Date of Last Inquiry Too Recent |
By Kenneth Long on July 9, 2010
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If you have been denied credit and see that one of the reasons was that the date of your last inquiry was too recent, then you should count yourself lucky. This is the easiest risk code to fix!
First of all, you should understand why you received the code in the first place when applying for credit. The credit bureau in which the report was pulled is taking note that you have applied for another account very recently.
Your score will drop anywhere from 1 to 5 points each time you apply for a new credit account. The amount of points you lose depends on a number of factors, such as how extensive your credit history is and how many inquiries were made in a short period of time. Applying for multiple credit accounts within the past 12 months can generate a separate score code that is also detrimental to your credit scores.
New credit is one of 6 major credit scoring components, comprising 10% of the risk factors that go into credit scoring formulas. If you apply for 2 accounts back-to-back, you can expect a noticeable dip in your credit scores.
Losing 10 points may not seem like a lot, but it can mean the difference of being approved for a loan or being denied. Even if you are approved, you might have to pay a higher rate because you just missed the threshold for their preferred rates.
There are two exceptions to this rule. Multiple inquiries toward a car loan will only count collectively as one inquiry as long as they were made in a short period of time. Similarly, shopping around for a mortgage loan will also provide for an exception. Older scoring models give you two weeks. Newer models give you 45 days.
How to Fix the Code
When you are denied credit and you believe that another recent inquiry is to blame, then there is only one course of action to take. If you do nothing, the problem will fix itself. That means avoid applying for any new credit accounts for several months. As long as you wait at least 6 months, you should be in better shape. Of course, that assumes that you have taken care of your existing credit accounts by making your payments and reducing your debt!
Join the Discussion at the Credit Forum: How long should you wait between opening new accounts?
Date of last inquiry too recent is credit bureau risk score reason 19 on the TransUnion Empirica scoring product, and reason D1 on FICO's NextGen scoring model. For more information on credit scoring, see the complete list of credit score factors.
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