When a lender requests to review your credit reports after you've applied for credit, it results in a hard inquiry. What does a hard inquiry mean for your credit scores? And how long does a hard inquiry remain on your credit report? [Duration - 1:25]
Highlights:
- When a lender or company requests to review your credit reports after you've applied for credit, it results in a hard inquiry
- Hard inquiries usually impact credit scores
- Multiple hard inquiries within a certain time period for a home or auto loan are generally counted as one inquiry
Some consumers are reluctant to check their credit reports because they are concerned that doing so may impact their credit scores. While pulling your own credit report does result in an inquiry on your credit report, it will not affect your credit score. In fact, knowing what information is in your credit report and checking your credit may help you get in the habit of monitoring your financial accounts.
One of the ways to establish smart credit behavior is to understand how inquiries work and what counts as a “hard” inquiry on your credit report.
What is a hard inquiry?
When a lender or company requests to review your credit report as part of the loan application process, that request is recorded on your credit report as a hard inquiry, and it usually will impact your credit score. This is different from a “soft” inquiry, which can result when you check your own credit or when a promotional credit card offer is generated. Soft inquiries do not impact your credit score.
Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year. Depending on your unique credit history, hard inquiries could indicate different things to different lenders.
Recent hard inquiries on your credit report tell a lender that you are currently shopping for new credit. This may be meaningful to a potential lender when assessing your creditworthiness.
Exceptions to the impact on your credit score
If you’re shopping for a new auto or mortgage loan or a new utility provider, the multiple inquiries are generally counted as one inquiryfor a given period of time. The period of time may vary depending on the credit scoring model used, but it's typically from 14 to 45 days.This allows you to check different lenders and find out the best loan terms for you.
All new auto or mortgage loan or utility inquiries will show on your credit report; however, only one of the inquiries within a specified window of time will impact your credit score.
This exception generally does not apply to other types of loans, such as credit cards. All inquiries will likely affect your credit score for those types of loans.
Plan before shopping for a loan
Before shopping for a loan, it’s always smart to proactively plan your finances.
First, learn whether the type of credit you’re applying for can have its hard inquiries treated as a single inquiry. Multiple inquiries from auto loan, mortgage or student loan lenders typically don’t affect most credit scores.
Second, you may also want to check your credit before getting quotes to understand what information is reported in your credit report. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com. You can also create a myEquifax accountto get six free Equifax credit reports each year.In addition, you can click“Get my free credit score” on your myEquifax dashboard to enroll in Equifax Core Credit™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is one of many types of credit scores.
If you’re worried about the effect that multiple hard inquiries may have on your credit report, it may be tempting to accept an offer early rather than allow multiple hard inquiries on your credit. However, consider your individual situation carefully before cutting your shopping period short. In many cases, the impact hard inquiries have on your credit score from shopping around may be less impactful than the long-term benefits of finding a loan with more favorable terms.
The more informed you are about what happens when you apply for a loan, the better you can prepare for the process. Learning more about credit inquiries before you go loan shoppingmay help you prepare for any impact they might have on your credit score.
FAQs
Since hard inquiries affect your credit score and what is found may even affect approval, you might be wondering: How many inquiries is too many? The answer differs from lender to lender, but most consider six total inquiries on a report at one time to be too many to gain approval for an additional credit card or loan.
Should I be worried about a hard inquiry on my credit report? ›
While a hard inquiry will stay on your credit report for two years, it will usually only impact your credit for up to a year, and usually by less than five points. Too many hard inquiries in a short time could make it look like you're seeking loans and credit cards that you may not be able to pay back.
What is the secret way to remove hard inquiries? ›
Unfortunately, there are no secret ways to remove hard inquiries from your credit report unless they are there in error.
How many points will a hard inquiry affect your credit? ›
A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases, the damage probably won't be that significant. As FICO explains, “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”
How long until hard inquiries fall off? ›
Hard inquiries fall off of your credit reports after two years. But your credit scores may only be affected for a year, according to credit-scoring company FICO®. “Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years,” the company says.
How many points is a hard inquiry on Credit Karma? ›
In contrast, multiple hard inquiries in a short period of time can reduce your score by much as five points per inquiry and can stay on your report for up to two years. Credit bureaus tend to deduct points, particularly if you have a short credit history or only a few accounts.
Is it worth disputing a hard inquiry? ›
Should You Remove Hard Inquiries? The idea of removing hard inquiries from your credit report to improve your credit score may sound appealing. But disputing a genuine hard inquiry on your credit report will likely not result in any change to your scores. You can, however, dispute ones that are a result of fraud.
How long does a hard inquiry stay on your credit score? ›
Soft inquiries do not impact your credit score. Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year.
Can hard inquiries be deleted? ›
If you find an unauthorized or inaccurate hard inquiry, you can file a dispute letter and request that the bureau remove it from your report. The consumer credit bureaus must investigate dispute requests unless they determine your dispute is frivolous. Still, not all disputes are accepted after investigation.
How much does it cost to get inquiries removed? ›
And there's really no need to pay a credit repair company to get an inaccurate inquiry removed, since you can do that yourself for free.
An inquiry typically has a small negative effect on your credit scores. Inquiries are a necessary part of applying for a mortgage, so you can't avoid them altogether. But it pays to be smart about them. As a general rule, apply for credit only when you need it.
How bad is 3 hard inquiries? ›
However, multiple hard inquiries can deplete your score by as much as 10 points each time they happen. People with six or more recent hard inquiries are eight times as likely to file for bankruptcy than those with none. That's way more inquiries than most of us need to find a good deal on a car loan or credit card.
Why did my credit score drop 40 points for a hard inquiry? ›
If you applied for a credit card or are shopping around for a loan, a hard inquiry can appear on your credit report, which temporarily lower a score. Hard inquiries happen when a lender or company reviews your report with the intent to make a lending decision.
Can I do multiple hard inquiries count as one? ›
“Any hard inquiries that occur within 14 days of each other are considered one inquiry for scoring purposes,” Ulzheimer says. “This includes credit card, mortgage, auto, student loan and any other hard inquiries.”
Is 20 inquiries too much? ›
There's no hard and fast rule for too many credit inquiries, as the impact of your inquiries on your credit score depends on various factors, such as the type of credit you're applying for, the length of your credit history, and your overall credit utilization.
Is too many soft inquiries bad? ›
Unlike hard inquiries, soft inquiries won't affect your credit scores. (They may or may not be recorded in your credit reports, depending on the credit bureau.) Since soft inquiries aren't connected to a specific application for new credit, they're only visible to you when you view your credit reports.
Are six credit cards too many? ›
There is no right number of credit cards — it depends on how many you can manage. Having multiple credit cards helps reduce your utilization rate and provides lenders with more information to better gauge your creditworthiness.
Can negative information ever be seen after the usual 7 or 10 years? ›
Bankruptcies can stay on your report for up to ten years. Even though the credit reporting companies usually won't report this negative information after the seven year limit, they still may keep your information on file.
