What Is a Hard Inquiry and How Does It Affect Your Credit Score? 

A hard inquiry, or a “hard pull,” happens when your credit report is requested. For example, a hard inquiry will show up on your credit report when you apply for a new credit card, credit line, or loan, or even when you rent an apartment. Each hard pull negatively impacts your credit score, typically dropping your score by about five points. For this reason, it’s good to keep the number of hard pulls on your credit report to a minimum.

What Are Inquiries on Your Credit Report?

If you apply for a loan or credit card, the organization will review your credit history. You can review your credit report beforehand to see what they will see. Your borrowing habits, like payment history and outstanding balances, are used by lenders to make decisions about your creditworthiness. These factors influence whether lenders will work with you.

If you miss several bill payments, it could make lenders think you might miss another payment later on. This could cause you to be denied for a loan or charged more interest. To review your creditworthiness, the lender has to ask the credit bureaus for your credit file, which results in a hard inquiry on your credit report.

What Is a Hard Inquiry?

When you apply for credit (or even an apartment), a lender, creditor or prospective landlord may request your credit report and score to evaluate your creditworthiness. This is known as a hard inquiry.

Here are some examples of activities that can result in hard inquiries on your credit report:

1. Applying for a Credit Card — When you submit an application for a new credit card, the card issuer will typically request your credit report from one or more credit bureaus, resulting in a hard inquiry.
2. Applying for a Loan — Whether it’s a personal loan, auto loan, or mortgage, when you apply for any type of loan, the lender will likely perform a hard inquiry on your credit report to evaluate your creditworthiness.
3. Renting an Apartment — Some landlords or property management companies may run a credit check as part of the rental application process, which can result in a hard inquiry.
4. Applying for a Mortgage — When you seek pre-approval or apply for a mortgage, the lender will typically request your credit report, leading to a hard inquiry.
5. Requesting a New Line of Credit — Whether it’s a new credit line, such as a home equity line of credit (HELOC) or a retail store credit card, the application process typically involves a hard inquiry.

It’s important to note that while hard inquiries can have a temporary negative impact on your credit score, the impact is usually minor and short-lived. However, it’s generally advisable to be mindful of the number of hard inquiries you accumulate within a short period, as excessive inquiries may be interpreted as a sign of increased risk to lenders.

What Is a Soft Inquiry?

A soft inquiry (or “soft pull”) is a type of inquiry that does not pertain to a particular credit card or loan application. Instead, it may occur when you check your own credit or when a company wants to prequalify you for a loan offer, but you haven’t applied in full yet. Unlike a hard inquiry, a soft inquiry has no effect on your credit score.

How Hard Inquiries Affect Credit Scores

In the short term, hard inquiries can harm your credit score. Though a hard inquiry will remain on your credit report for two years, it normally only impacts your credit for up to a year, usually reducing it by less than five points. If you have too many hard inquiries in a short span of time, it may appear that you’re trying to obtain loans or credit cards that you may not be able to repay.

Your credit score is influenced by various factors, but the two most significant are payment history (which makes up 35% of your FICO® Score☉) and credit usage or amounts owed (which makes up 30%). Applying for new credit contributes only 10% to your score, so a hard inquiry may not have a significant effect.

Sometimes, it is necessary to have a hard inquiry on your credit report, particularly when you want to apply for a mortgage or auto loan. The credit bureaus understand that you may need to apply to several lenders to compare rates for one loan.

If you apply for a loan and multiple inquiries show up on your credit report within a 14- to 45-day period, it won’t negatively affect your credit score. However, if you apply for multiple credit cards and a personal loan all within one week, it may signal to lenders that you are trying to take on more credit than you can handle. Each of these inquiries will be treated separately.

How Long Do Hard Inquiries Show on Your Credit Report?

If a lender runs a credit check on you, it will be recorded on your credit report for two years. Although all lenders can view these inquiries, they will only have an immediate impact on your credit score for up to one year. When you apply for credit, your score may slightly decrease at first, but it will gradually recover with responsible credit usage.

To maintain a good credit score, only apply for the credit that you really need. If you’re planning to apply for a significant credit product, such as a mortgage, in the next few months, it’s recommended that you refrain from applying for any other new credit. Doing so will help you keep your score as high as possible.

Bottom Line

To minimize the impact of hard inquiries on your credit score, it is important to regularly monitor your credit report and verify that all hard inquiries listed are ones that you actually made. If you find any unfamiliar inquiries, you have the right to dispute these errors with the credit bureaus. By being vigilant in this way, you can ensure that hard inquiries have the least possible impact on your score, which will help you qualify for financial products that can aid you in reaching your objectives.

Frequently Asked Questions (FAQs)