Two sorts of inquiries—soft inquiries and hard inquiries—may show up on your credit reports when you or a business requests access to your credit file.
Although soft inquiries are recorded on your credit reports, lenders are not aware of them, and they have no bearing on your credit scores. But hard inquiries are different. They can affect your credit scores and stay on credit reports for months, even years.
To find out more about hard inquiries and how they can impact your credit, continue reading. However, for what length of time do they stay on your credit reports?
Your credit score may drop a few points as a result of a hard inquiry, but this effect is typically slight and transient. According to FICO, a single hard inquiry will typically only lower your score by five points or less. However, the effect might be somewhat more pronounced if you have a short credit history or a low credit score.
What is a Hard Inquiry?
A hard inquiry occurs when a lender checks your credit report as part of a credit application. This could be for a new credit card a loan, or even a rental application. Every time a lender pulls your credit report it results in a hard inquiry.
How Long Do Hard Inquiries Stay on Your Credit Report?
Hard inquiries remain on your credit report for two years, but their impact on your credit score typically only lasts for one year. This means that after a year, the hard inquiry will no longer affect your credit score.
How Many Hard Inquiries Are Too Many?
While a single hard inquiry won’t significantly impact your credit score, multiple hard inquiries within a short period can be a red flag for lenders This could indicate that you are applying for a lot of credit, which could be a sign of financial distress
Here are some tips to minimize the impact of hard inquiries on your credit score:
- Shop around for loans and credit cards within a short period. Most credit scoring models will group multiple inquiries for the same type of loan within a 14-45 day window and count them as a single inquiry.
- Avoid applying for new credit if you are planning to apply for a major loan soon. A large number of hard inquiries in a short period can lower your credit score and make it more difficult to qualify for a loan with favorable terms.
- Monitor your credit reports regularly. You can get free copies of your credit reports from the three major credit bureaus (Experian, Equifax, and TransUnion) once a year at AnnualCreditReport.com. This will allow you to check for any errors or unauthorized inquiries on your reports.
Hard inquiries are a normal part of the credit application process, and they typically have a minimal impact on your credit score. However, it’s important to be mindful of how many hard inquiries you have on your credit report, especially if you are planning to apply for a major loan soon. By following the tips above, you can minimize the impact of hard inquiries on your credit score and maintain a healthy credit profile.
Additional Resources
- Experian: How Many Points Does an Inquiry Drop Your Credit Score?
- Capital One: How Long Do Hard Inquiries Stay on Your Credit Report?
- NerdWallet: How Many Hard Inquiries Are Too Many?
- AnnualCreditReport.com
Frequently Asked Questions
Q: How can I remove a hard inquiry from my credit report?
A: You can only remove a hard inquiry from your credit report if it was the result of identity theft or fraud. You will need to file a dispute with the three major credit bureaus to request its removal.
Q: How often should I check my credit reports?
A: You should check your credit reports at least once a year. Every year at AnnualCreditReport, you can obtain free copies of your credit reports from each of the three major credit bureaus: Equifax, TransUnion, and Experian. com.
Q: What is a good credit score?
A: A good credit score is generally considered to be 670 or higher. A higher credit score will qualify you for better interest rates and terms on loans and credit cards.
Q: How can I improve my credit score?
A: There are many things you can do to improve your credit score, including paying your bills on time, keeping your credit utilization low, and avoiding opening new credit accounts too frequently.
How does a hard inquiry affect credit?
Credit-scoring firm FICO® states that while a hard inquiry does affect your credit scores, they usually only decrease by roughly five points. And if you have a good credit history, the impact may be even less. That said, itâs helpful to know that credit inquiries make up about 10% of your total FICO® score. Keep in mind there are other credit-scoring companies and models that a lender could use.
Applying for additional credit at the same time as securing a large loan, such as a mortgage, might not be a good idea. By doing this, you may reduce the chance that, prior to applying for the larger loan, your credit scores will decline.
Obtaining your free credit reports from the three main credit bureaus—TransUnion®, Experian®, and Equifax®—is another way to stay informed about your credit status. You can retrieve free copies of your credit reports by visiting AnnualCreditReport. com.
Additionally, CreditWise from Capital One can help you access your TransUnion credit reports and your weekly VantageScore® 3. 0 credit score. Using CreditWise is free for everyone, regardless of whether they have a Capital One product, and it won’t lower your credit scores.
What is a hard inquiry?
An application for a home loan, credit card, or other credit line will entail a request for your credit history from the prospective lender. Known as a “hard inquiry” or “hard pull,” this action usually shows up on one or more of your credit reports.
Other examples of when your credit might undergo a hard inquiry include: