Published in July 28, 2023

The Effects of Multiple Credit Enquiries on Your Credit Score

The Effects of Multiple Credit Enquiries on Your Credit Score
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Credit scores play a crucial role in determining an individual’s financial standing and access to credit facilities. A credit score is a numerical representation of an individual’s creditworthiness, providing lenders with insights into the likelihood of timely repayment of debts. Maintaining a healthy credit score is essential for securing favourable loan terms, credit card approvals, and other financial opportunities.

One factor that can impact an individual’s credit score is the number of credit enquiries made by lenders when assessing their creditworthiness. A credit enquiry occurs when a lender or credit provider requests access to an individual’s credit report to evaluate their credit history and determine their eligibility for credit products. While it is essential for lenders to assess the risk associated with lending money, too many credit enquiries within a short period can potentially have adverse effects on an individual’s credit score.

In this article, we will delve into the effects of multiple credit enquiries on your credit score in Australia. We will also explore how credit enquiries are recorded, the distinction between hard and soft enquiries, and the potential impact on credit scores. Additionally, we will offer insights into best practices for managing credit enquiries to help individuals make informed decisions and maintain a healthy credit profile.

How Credit Enquiries Impact Credit Scores

Credit enquiries, also known as credit checks or pulls, occur when a third party requests access to your credit report to evaluate your credit history. These enquiries fall into two primary categories: hard enquiries and soft enquiries. Understanding the distinction between these two types of enquiries is essential as they have varying impacts on your credit scores.

Hard Enquiries

When you apply for credit, such as a new credit card, loan, or mortgage, the lender typically requests your credit report from a credit bureau to assess your creditworthiness. This type of credit inquiry is known as a hard inquiry. Hard enquiries can slightly lower your credit score and may stay on your credit report for up to five years. Multiple hard enquiries in a short period can be seen as a sign of financial distress, which can negatively impact your credit score.

Soft Enquiries

A soft enquiry occurs when you or a third party checks your credit report for non-lending purposes, like a background check or pre-approved credit offers. Soft enquiries do not affect your credit score and are visible only to you, not to other lenders. They also have no impact on your creditworthiness.

Credit Scoring Models

There are three main credit bureaus in Australia and each one has a unique algorithm to calculate your credit score.

  • Equifax Credit Score: Equifax is the largest credit reporting agency in Australia. It is responsible for collecting and distributing credit history data, generating credit reports, and calculating credit scores for individuals and businesses. Equifax’s credit score falls from zero to 1200, with a higher score indicating a stronger borrowing capacity. The factors considered in the credit score calculation include the number and types of accounts you have, the length of your credit history, and your payment history.

The Equifax Score bands can be broadly categorised as follows:

    • Excellent: 833 – 1200
    • Very Good: 726 – 832
    • Average: 622 – 725
    • Fair: 510 – 621
    • Low: 0 – 509
  • Experian Credit Score: Your Experian credit score is a numerical representation of the strengths and weaknesses in your credit report. It ranges from zero to 1000, with a higher score indicating a healthier credit history. Like other credit reporting bodies, Experian uses its algorithm to calculate credit scores based on the information provided by credit providers, such as borrowing and repayment habits, and any enquiry activities.

The Experian Score bands can be broadly categorised as follows:

    • Excellent: 800 – 1000
    • Very Good: 700 – 799
    • Average: 625 – 699
    • Fair: 550 – 624
    • Low: 0 – 549
  • Illion Credit Score: Illion is another significant credit reporting agency in Australia. Like Equifax and Experian, Illion collects and distributes credit-related data from credit providers and calculates credit scores. Your Illion credit score is derived from the information on your credit report, including credit accounts, repayment history, defaults, and credit enquiries. Illion’s credit scoring system may differ slightly from the other two agencies. It classifies credit ratings using categories such as low score, room for improvement, good, great, and excellent.

The Illion Score bands can be broadly categorised as follows:

    • Excellent: 800 – 1000
    • Great: 700 – 799
    • Good: 500 – 699
    • Room for Improvement: 300-499
    • Low: 1 – 299
    • Zero: 0

Factors Considered in Calculating Credit Scores

Credit scoring models typically consider various factors to calculate credit scores. These may include:

  • Payment History: This is one of the most crucial factors, and it assesses whether you have paid your credit accounts on time.
  • Credit Utilisation: The percentage of available credit you are currently using. Keeping your credit utilisation low is generally considered positive for your score.
  • Credit History Length: The length of time you have had credit accounts open. Longer credit history can positively influence your score.
  • Types of Credit: A mix of different types of credit, such as credit cards, loans, and mortgages, can have a positive effect on your score.
  • Recent Credit Enquiries: Hard enquiries from previous credit applications can harm your credit score.

Weightage and Time Frames Associated with Credit Enquiries in Credit Scoring

The specific weightage assigned to credit enquiries varies among credit scoring models. Generally, a single hard enquiry may cause a minor decrease in the credit score. However, credit scoring models often take into account rate shopping behaviour. If an individual is applying for the same type of credit product (e.g., a mortgage or auto loan) within a short period, multiple enquiries related to that product are usually treated as a single enquiry to mitigate any negative impact on the credit score.

Strategies to Minimise the Negative Impact of Multiple Enquiries

Multiple credit enquiries can have adverse effects on credit scores, but there are several strategies borrowers can employ to mitigate these impacts and maintain a healthy credit profile.

Limit Credit Applications to Essential and Necessary Ones:

To minimise the negative impact of multiple credit enquiries, borrowers should be prudent in applying for new credit. They should limit credit applications to only essential ones, focusing on credit products that align with their current financial needs. Avoiding unnecessary credit applications can help reduce the number of hard enquiries on their credit report and maintain a positive credit score.

Time Credit Applications Strategically to Minimise Consecutive Enquiries

Borrowers should be strategic in timing their credit applications to avoid consecutive hard enquiries. Making multiple credit applications within a short period can raise concerns among lenders and negatively affect credit scores. Instead, individuals can space out their credit applications, allowing sufficient time between each application to minimise the impact on their credit report.

Seek Pre-Approval Offers to Assess Eligibility Before Submitting Credit Applications

Before submitting credit applications, borrowers can seek pre-approval offers from lenders. Pre-approval offers are based on soft credit enquiries and do not impact credit scores. These offers provide borrowers with an idea of their eligibility and the terms they may qualify for without generating hard enquiries. By exploring pre-approval offers, borrowers can make informed decisions and apply only to lenders where they have a higher likelihood of approval.

Helpful Tip: Tippla provides information on personalised credit offers that fit your current credit score. Sign up with Tippla to access this feature today!

Monitoring and Managing Credit Enquiries

Regularly monitoring and managing credit enquiries is crucial for maintaining a healthy credit profile. By being proactive and staying informed about credit enquiries, individuals can detect inaccuracies, unauthorised enquiries, and potential concerns early on.

Regularly Check Credit Reports for Accuracy and Unauthorised Enquiries

Regularly checking credit reports for accuracy and unauthorised credit inquiries is crucial for maintaining a healthy credit file and protecting your financial well-being. Tippla, a multi-bureau credit score tool, can be a valuable resource in this process, offering access to your Equifax and Experian credit scores and reports to help you stay informed about your creditworthiness.

Dispute Inaccurate or Unauthorised Enquiries with Credit Reporting Agencies

If individuals find inaccurate or unauthorised enquiries on their credit reports, they should immediately dispute these entries with the respective credit reporting agencies. The credit reporting agencies should investigate and correct inaccurate information on credit reports. Disputing enquiries helps ensure that credit reports are a true reflection of an individual’s credit history and reduces the risk of negative impacts on credit scores.

Utilise Credit Monitoring Services to Stay Informed about Credit Enquiries

Credit monitoring services can provide real-time alerts and updates about changes to an individual’s credit report, including new credit enquiries. Such services help borrowers stay informed about their credit activity and identify any potential red flags. Platforms like Tippla offer credit monitoring services to help customers keep track of their credit scores and detect any unauthorised credit enquiries or changes in their credit reports.

Did You Know? 💡Tippla is a free tool you can use to monitor your credit score. We have partnered with two of Australia’s biggest credit reporting agencies so that we can provide accurate data to our customers. Sign up with us today to see your credit score and learn more about ways to improve your credit profile through Tippla’s credit school!

Seek Professional Advice or Credit Counseling if Multiple Enquiries Become a Concern

If an individual’s credit report shows an excessive number of credit enquiries or if they face challenges managing their credit, seeking professional advice or credit counselling can be beneficial. Credit counsellors can provide personalised guidance, offer financial management strategies, and assist in developing a plan to improve creditworthiness. They can help individuals understand how credit enquiries impact their credit scores and suggest steps to minimise potential negative effects.

Rebuilding and Improving Credit Scores

For individuals seeking to rebuild and improve their credit scores after experiencing negative impacts from multiple credit enquiries, responsible credit management is key.

Importance of Responsible Credit Management to Rebuild Credit Scores

Responsible credit management is fundamental to rebuilding credit scores. It involves adopting financial habits that demonstrate creditworthiness and responsible borrowing. By proving their ability to manage credit responsibly, borrowers can rebuild trust with lenders and credit reporting agencies, leading to improvements in their credit scores over time.

Making Timely Payments and Reducing Outstanding Debts

One of the most critical factors affecting credit scores is the payment history. To rebuild credit, individuals should prioritise making timely payments on all credit accounts, including loans and credit cards. Consistently paying bills on time demonstrates reliability and positive credit behaviour, positively impacting credit scores. Additionally, reducing outstanding debts can help improve credit utilisation and signal financial responsibility to lenders.

Maintaining a Healthy Credit Utilisation Ratio

Credit utilisation, the ratio of credit used to the total credit available, significantly influences credit scores. Keeping credit utilisation low, ideally below 30%, demonstrates responsible credit management and can positively impact credit scores. By paying down debts and using credit wisely, individuals can maintain a healthy credit utilisation ratio and improve their creditworthiness.


Managing credit inquiries wisely is crucial for maintaining a healthy credit profile. Hard inquiries resulting from credit applications can lower credit scores, while soft inquiries have no impact. To minimise the negative effects of multiple inquiries, individuals should be selective in their credit applications, limiting them to essential needs and spacing them strategically. Seeking pre-approval offers and using services like Tippla’s personalised loan offers can help assess eligibility before applying for credit, reducing unnecessary inquiries.

Effective credit score maintenance involves monitoring and managing credit inquiries. Regularly checking credit reports for accuracy and disputing any errors or unauthorised inquiries with credit reporting agencies are essential practices. Credit monitoring services, such as Tippla’s, keep borrowers informed about their credit status and help detect potential concerns early on.

Additionally, responsible credit management, such as making timely payments, reducing debts, and maintaining a healthy credit utilisation ratio, is vital for rebuilding and improving credit scores after multiple inquiries. With patience and persistence, the impact of inquiries diminishes over time with consistently responsible credit behaviour.

While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.

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