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

Let’s say you’re looking into a new credit card. You finally find the right card for you, but when you look into the application process, you realize it requires a hard inquiry. What exactly is a hard inquiry? Will it affect your credit score?

Hard inquiries get reported on your credit report when someone checks your credit for the purpose of considering you for a loan or credit card. These items do impact your credit, so it’s important to understand what they are, why they’re there and how you can limit them. Find out more about hard inquiries and how to keep them from lowering your credit unnecessarily below.

What Are Hard Inquiries?

Credit inquiries occur whenever someone accesses your credit account. The credit bureaus note this information, recording the date and the name of the company or entity accessing your information. Hard inquiries specifically refer to instances when a lender accesses your credit report for the purpose of evaluating you as a borrower. In other words, hard inquiries happen when lenders look at the information in your report to decide whether to approve or deny your application for credit.

Are Hard Inquiries Bad?

Hard inquiries aren’t necessarily bad. They’re simply an aspect of how credit reporting works. And it’s actually good that this information is recorded. You should be able to see who accessed your personal credit information and why.

That being said, hard inquiries aren’t neutral. They can impact your credit, so you want to keep them to a minimal number when possible.

How Do Hard Inquiries Impact Your Credit?

Hard inquiries are one of the five major factors that make up your credit score. Those factors include:

  • Payment history. Whether you pay your bills on time and as agreed accounts for around 35% of your credit score.
  • Credit utilization. How much of your available revolving credit limit you’re actively using accounts for around 30% of your score.
  • Credit age. How long you’ve had credit and the age of your oldest accounts contributes to around 15% of your score.
  • Credit mix. Creditors want to see that you can manage different types of accounts, such as revolving and installment accounts. Credit mix makes up around 10% of your score.
  • Hard inquiries. The number of recent hard inquiries on your report makes up about 10% of your score.

As you can see, hard inquiries are not the most important factor in your score, but they do impact it. That’s because having a large number of hard inquiries on your account looks like you’re desperately chasing credit. That’s not behavior a lender would expect to see from someone with stable finances.

According to Experian, hard inquiries remain on your credit report for 25 months. However, they only tend to impact your credit score the first 12 months.

How much a hard inquiry impacts your credit depends on a variety of factors, including what your credit score was to begin with. Experian notes that on average, a hard inquiry can bring your score down 5-10 points. If you have excellent credit and no other issues, the drop might be even less.

How Many Hard Inquiries Is Too Much?

There’s no set number of inquiries that are too many. If you suddenly have a lot of inquiries, it can look bad to potential creditors. And if you’re losing up to 10 points for each one, you could drop from excellent or good credit to fair or poor credit with just five or more inquiries.

Spacing out the inquiries and ensuring that your credit report doesn’t take a hit can help minimize these issues. It also gives your score time to recover before another inquiry.

Hard Inquiries vs. Soft Inquiries

Not all inquiries that show up on your credit report impact your score. Only those that are meant to evaluate you for credit do. Soft inquiries, which are informational only and have little to do with credit, don’t have the same impact. They’re also not usually visible to people other than you.

Examples of Hard Inquiries

  • A credit card company checking your credit after you applied for a card
  • A bank checking your credit because you applied for a car loan
  • A company checking your credit before leasing you a car

The key thing to remember with hard inquiries is that you should know they’re about to happen. Your credit can’t be accessed for this purpose without you agreeing to it in writing.

Examples of Soft Inquiries

  • You check your credit for informational purposes
  • An employer checks your credit as part of a background check
  • A credit card company does a soft pull on your credit to prequalify you for an offer

Soft inquiries don’t always require your permission. While employers have to get your permission to run background checks, creditors don’t need permission to run a soft check to prequalify you for marketing offers. You do have the option to opt-out of those marketing soft checks.

Minimizing Credit Score Impact From Hard Inquiries

So, how do you reduce the impact of hard inquiries on your credit score? In this day and age, it can be difficult to go through life without ever applying for credit. But you can take some of the steps below to reduce how much hard inquiries impact your score.

1. Don’t Spread Out Loan Shopping

The credit scoring models know that you’ll want to shop around for the best rates. Because of that, multiple applications for credit during short periods of time can be treated as a single inquiry on your credit report as far as impact to score goes.

For example, under the FICO Score model, inquiries related to auto loan applications within a 45-day period are treated as a single event. The same is true for mortgage and student loan applications. And any queries that occur within 30 days prior to a score being pulled won’t impact the score at all.

The VantageScore model considers multiple inquiries to be one hard inquiry if they take place within a 14-day period. This includes applications for mortgage and vehicle loans, utility services and some other credit inquiries.

2. Keep Tabs on Your Credit Report

You only know if inquiries are impacting your credit if you’re tracking your report and score. Check your credit regularly to understand where you stand and whether there are any potential mistakes bringing your score down. You can check your score with Credit.com’s free Credit Report Card or get many versions of your FICO® Score with ExtraCredit. Neither of these options constitute a hard inquiry, so using them won’t hurt your credit.

3. Don’t Apply If You Aren’t Fairly Confident

Avoid applying to credit just to see if you qualify. Understand your credit score and what type of credit you are likely to qualify for, and only apply when you need the credit. Otherwise, you’re racking up hard inquiries for no reason.

4. Manage Other Aspects of Your Score Responsibly

Make payments on time, keep your credit utilization low and manage multiple types of accounts well. These all have more impact on your credit score than hard inquiries. If your credit is already strong, a hard inquiry won’t impact it as much.

Can You Remove Hard Inquiries from Your Credit Report?

You can’t get legitimate hard inquiries removed from your credit report. But if you see inaccurate hard inquiries or credit pulls you didn’t agree to, you can challenge them and ask for verification of your authorization.

Challenge errors on your credit report by writing a letter to the credit bureau in question and ask for verification of the error in question. Let them know the issue and why you believe the information is wrong. Ask them to remove the inquiry. The credit bureau must investigate your claim and remove the inquiry if they deem that it’s on your report in error.

Keep an Eye on Hard Inquiries

In a nutshell, hard inquiries aren’t anything to be scared of. If you keep your credit applications relatively low, and if your credit is in good shape, you have nothing to worry about. But with that said, you do look out for the number of hard inquiries made into your credit score. Your credit score could take a hit—if you’re not careful.

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