What is a Hard Inquiry? Do They Affect Your Credit Score?

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Updated: 20th Jan 2021
Written by Kim Pinnelli
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Every time someone views your credit report, it’s an inquiry. Sometimes it’s a hard inquiry, and sometimes it’s a soft inquiry.

The difference could mean a drop in your credit score or a credit score that’s unaffected. Understanding how hard and soft inquiries work and how they affect your credit is crucial to a healthy credit score.

What Are Inquiries on Your Credit Report?

An inquiry on your credit report means someone checked your credit. Lenders, employers, insurance companies, and more pull credit reports to see your financial responsibility.

They look at your payment history, amount of outstanding debt, and how you handle your debts.

Anytime someone pulls your credit, it’s an inquiry. But not all inquiries affect your credit score.

If you pull your own credit or a lender pulls your credit to pre-qualify you for a credit card or loan, it doesn’t hurt your credit.

Soft Inquiries do not decrease your credit score. But understanding the difference between a hard and soft inquiry is important. You can get a free copy of your credit report here.

What is a Hard Inquiry?

If you apply for new credit and a lender pulls your credit with the intent to lend, it’s a hard inquiry. This shows up on your credit report and hurts your credit score, but not much.

Anytime you authorize a lender to pull your credit, it’s a hard inquiry. Too many inquiries on your credit report is a red flag. It’s a sign to lenders that you are in financial trouble and are trying to get money any way you can.

For example, if I applied for three credit cards and two personal loans – it looks like I’m desperate for money. But if I applied for one credit card or one personal loan, it doesn’t look as ‘desperate.’

How Does a Hard Inquiry Affect Your Credit Score?

Not only does a hard inquiry show up on your credit report, alerting lenders you recently applied for credit, but it also hurts your credit score.

Fortunately, it doesn’t hurt it much. One inquiry may drop your score around 5 points. That is peanuts unless you are on the brink of fair/poor credit, then every point may be worth its weight in gold.

Some people may not see any change in their credit report, it depends on your other factors.

Examples of Hard Inquiries

Telling the difference between hard and soft inquiries isn’t as hard as it seems. If you apply for new credit – it’s a hard inquiry. For example:

  • Applying for a new car loan
  • Applying for a new mortgage
  • Completing a credit card application
  • Completing an apartment rental application
  • Applying for a personal or student loan

Anytime you apply for a loan, it’s an inquiry. But there are situations when lenders pull your credit that doesn’t affect your credit because they are a soft inquiry:

  • Credit card companies who send out pre-qualified offers
  • Insurance companies who send out pre-qualified insurance rates
  • Employers who pull your credit for a job application

One other time you don’t get hit with a hard inquiry is if you pull your credit report. You SHOULD check your credit at least once a year, but even if you check it more often, it doesn’t count as an inquiry.

Other companies may pull your credit too. If you’re worried about how it may affect your credit score, ask them if it’s a hard or soft inquiry.

Good examples include utility companies, cellphone companies, and cable companies.

How Long Does A Hard Inquiry Last?

Hard inquires show up on your credit report for 2 years. That doesn’t mean they affect your credit card for the entire time, though.

Most hard inquiries affect your credit score for 1 year, sometimes even less. But the inquiry itself remains listed on your credit report. The largest effect occurs right away.

You will see the 5 or so point drop when you first apply. Over a few months though, you’ll see your score bounce back, assuming you have good credit habits otherwise.

If you know you’re applying for something ‘big’ like a mortgage soon, avoid applying for any other credit in the months leading up to it.

Do Hard Inquiries “Fall Off” Your Credit Report?

It takes two years for inquiries to fall off your credit report. There is nothing you can do to get them off sooner UNLESS you didn’t authorize the hard inquiry.

This is a serious issue and something you must address right away and why it’s so important to check your credit report often.

If you notice hard inquiries that you didn’t authorize, dispute them right away. You can complete a dispute online with the credit bureau reporting the information (TransUnion, Experian, or Equifax).

If there are several inquiries, you may want to dispute the inquiries in writing and via certified mail with a return receipt.

However, if this is confusing and intimidating, then consider hiring a credit repair company. They can handle this situation in no time and potentially clean up your credit profile.

The credit bureaus have 30 days to respond to your inquiry, or they must remove the information from your credit report.

It’s essential to pay attention to inquiries you didn’t authorize as it could be a sign of identity theft. Addressing the situation right away could prevent further financial issues.

Next Steps: How to Remove a Hard Inquiry from Your Credit Report

How Do Lenders View Hard Inquiries? What About Credit Card Issuers?

Just like the rest of your credit history, lenders use hard inquiries to form their opinion on your financial responsibility. One inquiry isn’t a big deal, usually. Multiple inquiries, though, may make a difference, here’s why.

Does Shopping for the Best Rates Result In Multiple Hard Inquiries?

Here’s a valuable loophole when it comes to multiple hard inquiries.

The credit bureaus recognize when your comparison shopping and YOU SHOULD. Comparative marketplaces like LendingTree can save you thousands of dollars and help you lock in on the best interest rate.

Let’s say you’re in the market for a mortgage. You should get quotes from at least three lenders. If you only apply with one lender, how do you know what others offer?

What if you are paying too much?

That’s why credit bureaus only hit you for one inquiry when your comparison shopping if you do the following:

  • Only apply for the same type of credit – In the case of shopping for a mortgage, do not apply for 2 mortgages and 2 credit cards and think you’ll get hit with one inquiry. This only applies to the same type of loans. Now, if you got quotes from 4 lenders, that would count as one inquiry.
  • Apply for the loans within a short period – Apply within 2 – 3 weeks of the first application to ensure you only get hit with one inquiry. Applying for a mortgage today and then another one in a month will result in two inquiries, for example.

Here is the ‘official’ way credit bureaus view multiple inquiries.

Any inquiries within 30 days get lumped together, again only if they’re for the same type of credit (car loan to car loan or mortgage to mortgage, for example).

Any inquiries outside of the 30-day window but within a 45-day window are lumped together, or as they call it ‘collapsed.’

I like to keep it simple though – keep your inquiries within a few weeks of each other, and you should only see one hit on your credit report.

Wrapping Up: What A Hard Inquiry Really Is

A hard inquiry is a record of your credit application. It’s not your employer, yourself, or a credit company pre-qualifying you for credit.

Those do not count, even though they are ‘inquiries.’

It is the hard inquiries – the ones that show you applying for new credit that future lenders and credit card companies consider and that you should use with caution.

Expert Credit Resources: 

Kim Pinnelli
Kim Pinnelli
Kim is a personal finance expert with a Bachelor’s degree in Finance from the University of Illinois at Chicago. She has been freelance writing for 13 years for a number of large publications. Kim thoroughly enjoys helping people take charge of their personal finances.