If you’re wondering how many points a hard inquiry will affect your credit score, the answer is that it depends. Here’s what you need to know.
Checkout this video:
The Effect of a Hard Inquiry on Your Credit Score
A hard inquiry will usually lower your credit score by a few points. The impact of a hard inquiry on your credit score will depend on your credit history and the type of inquiries you have. If you have a long history of credit inquiries, a hard inquiry will have a smaller impact on your score.
How a Hard Inquiry Affects Your Score
A hard inquiry on your credit report happens when you apply for a loan or a credit card.
Lenders pulled your credit report as part of their approval process. A hard inquiry will stay on your report for two years, but its effect on your score will lessen over time.
In the short term, hard inquiries can cause your score to drop by a few points. If you have multiple inquiries in a short period of time, it could signal to lenders that you’re “shopping around” for financing, which could lead them to think you’re desperate or likely to take on too much debt.
That said, if you have a strong credit history and manage your finances responsibly, one or two hard inquiries probably won’t have much of an impact on your score—and they may not have any impact at all.
How Long a Hard Inquiry Affects Your Score
When you apply for any new credit card, loan or line of credit, the lender will almost always check your credit score as part of their decision-making process. This hard inquiry could lower your credit score by a few points, but it won’t have a long-term effect on your creditworthiness.
A hard inquiry generally remains on your credit report for two years, although it will only affect your score for up to 12 months. After that, the inquiry will fall off your report and will no longer influence your score.
If you’re worried about the impact a hard inquiry could have on your score, there are a few things you can do to offset the damage. First, make sure you’re only applying for new credit when you really need it. Every hard inquiry gives lenders another reason to question your creditworthiness, so it’s best to limit inquiries to only those that are absolutely necessary.
Second, be sure to keep up with all your other payments and obligations. Even one late payment can offset the positive impact of a strong credit history, so it’s important to maintain good payment habits even if you do have a fewhard inquiries on your report.
Lastly, don’t hesitate to shop around for the best deal on a loan or credit card. Many lenders will offer pre-approval odds that give you an idea of whether you’ll be approved without requiring a hard inquiry on your report. By comparison shopping and only applying for those offers where you’re almost certain to be approved, you can minimize the number of inquiries that appear on your report.
How to Avoid a Hard Inquiry on Your Credit Score
A hard inquiry is when a lender checks your credit score when you apply for a loan or credit card. This can lower your credit score by a few points. You can avoid a hard inquiry by applying for pre-approved loans or credit cards. You can also ask the lender to do a soft inquiry instead.
What is a Hard Inquiry?
In credit scoring, a hard inquiry is the result of an application for new credit, and it has a negative effect on your score. The impact is largest when you have few active accounts and a short history with credit.
The FICO scoring model counts hard inquiries as one of many negative items that can hurt your score. The effect of hard inquiries is typically temporary, lasting 12 to 24 months. If you’re trying to improve your credit score, it’s important to know how hard inquiries work and how long they’ll stay on your report.
A hard inquiry appears on your credit report when you apply for new credit and is visible to anyone who pulls your report. When a lender checks your credit in connection with an application for new credit, it’s called a hard inquiry or hard pull. A hard inquiry will stay on your report for two years, but its effect on your credit score will diminish over time after the first 12 months.
How to Avoid a Hard Inquiry
A hard inquiry—also called a hard pull—is a review of your credit report requested by a lender with whom you’ve applied for new credit. Hard inquiries are generated when you complete an application for a new credit card, loan or other type of account, and they can damage your credit scores.
Lenders use information from your credit report to help them decide whether to approve you for a new account. When they review your report, they’ll also see any hard inquiries that have been made in the past two years. Those inquiries could result in a small drop in your scores—typically less than five points per inquiry, although the exact amount depends on your overall credit history and the scoring model being used.
You can avoid hard inquiries altogether by not applying for new credit accounts. If you need to apply for financing, there are some steps you can take to minimize the impact on your credit scores:
-Only apply for new credit when you need it: Applying for multiple lines of credit in a short period of time can signal to lenders that you’re in financial distress. If possible, wait at least six months between applications.
-Check your own credit reports: You’re entitled to one free copy of your credit report from each of the major credit reporting agencies every 12 months. Reviewing your reports regularly can help you catch errors and identify potential signs of fraud or identity theft. You can also check your own credit scores for free with many websites and mobile apps.
-Shop around for rates: Many lenders offer pre-qualification, which allows you to see what kind of rates and terms you might be eligible for without triggering a hard inquiry. Once you know what kinds of rates are available, you can choose the lender that offers the best deal without affecting your credit scores.