How Credit Inquiries Affect Your Credit Score | Bankrate (2024)

If you’re trying to increase your credit score, chances are you’re watching many factors. You’re making sure you pay your bills on time because your payment history counts for 35 percent of your credit score. You’re also watching your credit utilization ratio, which counts for 30 percent of your FICO score. But did you know that credit inquiries make up 10 percent of your FICO score and some types of credit inquiries can lower your credit score?

There are a lot of reasons why someone might inquire into your credit history. When you apply for a new credit card, take out a mortgage or rent an apartment, lenders and landlords conduct credit inquiries to determine whether you are likely to be a financial risk. These inquiries are called hard credit inquiries and they have the potential to drop your credit score by several points. Other types of credit inquiries are called soft credit inquiries. These inquiries are more like background checks and don’t affect your credit score in any way.

A lot of people wonder how much credit inquiries affect their credit score. Since the best credit cards today are generally reserved for people with good or excellent credit, every credit score point counts. Does that mean you need to worry about credit inquiries lowering your score? And how many points does a hard inquiry — and other types of credit management activities — take off your credit score?

In most cases, you don’t have to worry about credit inquiries doing significant damage to your credit. Let’s take a close look at how different types of credit inquiries affect your credit score.

What is a credit inquiry?

A credit inquiry is an examination of your credit. Lenders, landlords and potential employers have the ability to request access to your credit file, which includes your credit history, and these credit inquiries help them to get a quick overview of whether you’ve been using credit responsibly.

Why do credit inquiries matter?

When you apply for a credit card, shop for a loan or prepare to take on a new financial responsibility (like renting an apartment), the lenders and companies involved want to know whether you’re likely to be a financial risk. By conducting an inquiry into your credit history, these companies are able to assess your level of financial responsibility and the likelihood that you might default on your loan, miss credit card payments or skip out on rent.

There are two different types of credit inquiries: hard inquiries, which can have a negative effect on your credit score, and soft inquiries, which don’t affect your credit score at all.

What is the difference between a hard inquiry and soft inquiry?

What is a hard inquiry?

Hard credit inquiries, sometimes called hard pulls or hard credit checks, take place when you request a new line of credit or begin the process of taking on a major financial commitment. If you apply for a credit card, for example, the card issuer will pull your credit file and you’ll see a hard inquiry on your credit reports. You must give permission for a company to perform a hard pull on your credit, so these inquiries shouldn’t take you by surprise.

Common hard credit inquiries include:

  • Credit card applications
  • Loan applications (including mortgages, car loans and personal loans)
  • Apartment rental applications
  • Phone or utility applications

What is a soft inquiry?

Soft credit inquiries, also known as soft pulls or soft credit checks, occur when companies pull your credit file for a reason unrelated to a new financial obligation. Soft credit inquiries are often performed as background checks and are sometimes used to determine whether you can be pre-approved for a credit offer. Although some soft credit inquiries (such as employer credit checks) only take place with your permission, other soft inquiries don’t require permission and may even occur without your knowledge.

Common soft credit inquiries include:

  • Employer credit checks
  • Insurance quotes
  • Prequalified offers for credit cards, loans or insurance
  • Credit monitoring services
  • Free credit score access through your banking app
  • Credit limit increases (or decreases) on your credit cards that you did not request

Soft inquiries are usually not indicative of a firm financial commitment, so they don’t affect your credit score.

Does checking your credit score lower it?

Checking your own credit score is considered a soft inquiry and does not lower your credit. Many credit card issuers offer access to your credit score for free (some even offer credit monitoring). If a credit-tracking app or website does make an inquiry into your file as part of its credit monitoring process, it will be a soft inquiry that will have no effect on your credit score.

You also don’t need to worry about lowering your credit by checking your credit report. Any time you pull your credit file from Experian, TransUnion or Equifax to assess your credit history or dispute credit report errors, it counts as a soft inquiry and won’t affect your credit score.

How multiple credit inquiries affect your score

Can multiple credit inquiries have a negative effect on your credit score? It depends on what kind of credit you’re shopping for.

If you’re rate shopping to find the best interest rate on something like a mortgage or an auto loan, the major credit bureaus and FICO understand you’re likely to have multiple credit inquiries on your account. That’s why multiple inquiries for the same type of credit are considered to be a single inquiry if they occur within a specific time span. Older FICO scoring models consolidate inquiries made within two weeks, while the newest FICO score gives consumers 45 days to shop around for the best rates and terms.

If you apply for multiple credit cards in a short time period, each application will add a new hard credit inquiry to your credit report. This could make a big difference in your interest rates if you are on the border between good credit and excellent credit — and it’s one of the reasons why it’s a good idea to wait at least 90 days between credit card applications.

How do hard inquiries impact your credit score?

A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases the damage probably won’t be that significant. As FICO explains: “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”

FICO also reports that hard credit inquiries can remain on your credit report for up to two years. However, when FICO calculates your credit score, it only considers credit inquiries made in the past 12 months. This means that if your credit inquiry is over a year old, it will no longer affect your FICO credit score.

How do soft inquiries impact your credit score?

A soft inquiry does not affect your credit score in any way. When a lender performs a soft inquiry on your credit file, the inquiry might appear on your credit report but it won’t impact your credit score.

How to dispute or remove credit inquiries

It’s possible to dispute or remove some credit inquiries from your credit report. If you initiated a hard credit pull by applying for new credit, you cannot remove the inquiry from your report. However, if a credit inquiry is the result of fraud (like identity theft) or some other error, you can file a dispute with the three credit bureaus — Equifax, Experian and TransUnion — in order to request a hard inquiry removal.

The bottom line

Once you understand how credit inquiries affect your credit score, you can make smart decisions about when to apply for new credit. Checking your credit score does not lower it, so feel free to review your credit score as often as you like. If you decide to take on a major financial obligation like a new credit card, mortgage or apartment rental, expect a hard inquiry into your credit. In many cases, a hard credit inquiry will only drop your score by about five points — and soft credit inquiries won’t affect your score at all.

How Credit Inquiries Affect Your Credit Score | Bankrate (2024)

FAQs

How much does credit inquiries affect your credit score? ›

How do hard inquiries impact your credit score? A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases, the damage probably won't be that significant. As FICO explains, “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”

Will removing inquiries increase credit score? ›

Removing a hard inquiry can raise your credit score if it's recent, but it may have no impact at all. While hard inquiries stay on your credit report for around two years, they only affect your score for about six months to a year. So, removing a hard inquiry over a year old may not raise your score.

Is 3 hard inquiries bad? ›

There's no such thing as “too many” hard credit inquiries, but multiple applications for new credit accounts within a short time frame could point to a risky borrower. Rate shopping for a particular loan, however, may be treated as a single inquiry and have minimal impact on your creditworthiness.

Why did my credit score drop 100 points after opening a credit card? ›

When you open a new credit account, it lowers the overall age of your credit. In addition to the age of credit, opening up any new credit account generally requires a hard inquiry, which could ding your credit score a few points temporarily. After about two years, the inquiry should drop off.

What is the secret way to remove hard inquiries? ›

The easiest way is to file a dispute directly with the creditor. If the creditor cooperates, the inquiry may be removed after sending a single dispute letter.

How many inquiries are too many in a year? ›

If you collect about six hard inquiries within a two-year period on your credit report, you may have a difficult time getting approvals for future cards and other lines of credit.

How many points when an inquiry falls off? ›

According to FICO, a hard inquiry from a lender will decrease your credit score five points or less. If you have a strong credit history and no other credit issues, you may find that your scores drop even less than that. The drop is temporary.

How to improve credit fast? ›

15 steps to improve your credit scores
  1. Dispute items on your credit report. ...
  2. Make all payments on time. ...
  3. Avoid unnecessary credit inquiries. ...
  4. Apply for a new credit card. ...
  5. Increase your credit card limit. ...
  6. Pay down your credit card balances. ...
  7. Consolidate credit card debt with a term loan. ...
  8. Become an authorized user.
Jan 18, 2024

How long does it take for credit score to go back up after a hard inquiry? ›

FICO® reports that a hard inquiry will reduce your credit score by five points or less. Your scores should rebound in a few months.

How to get 800 credit score? ›

Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.

How damaging is a hard inquiry? ›

While a hard inquiry will stay on your credit report for two years, it will usually only impact your credit for up to a year, and usually by less than five points. Too many hard inquiries in a short time could make it look like you're seeking loans and credit cards that you may not be able to pay back.

How do I check my credit score without hurting it? ›

A soft credit inquiry, also called a soft credit check or soft pull, is usually done by you or another authorized person, like an employer. Soft credit inquiries don't affect your credit score because you're not actually applying for credit, and these types of inquiries don't necessarily require your permission.

Why did my credit score go from 524 to 0? ›

Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

How to raise your credit score 200 points in 30 days? ›

How to Raise your Credit Score by 200 Points in 30 Days?
  1. Be a Responsible Payer. ...
  2. Limit your Loan and Credit Card Applications. ...
  3. Lower your Credit Utilisation Rate. ...
  4. Raise Dispute for Inaccuracies in your Credit Report. ...
  5. Do not Close Old Accounts.
Aug 1, 2022

Why is my credit score going down if I pay everything on time? ›

It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.

Why did my credit score drop 40 points? ›

The most likely reasons are: your balances increased, you recently closed accounts, you applied for new lines of credit, or there is inaccurate or fraudulent information on your account. If your credit score dropped by 40 points, this is likely due to late payments that continue to compound on past-due bills.

Why did my credit score drop 50 points? ›

Heavy credit card use, a missed payment or a flurry of credit applications could account for a credit score drop. Amanda Barroso is a personal finance writer who joined NerdWallet in 2021, covering credit scoring. She has also written data studies and contributed to NerdWallet's "Smart Money" podcast.

Is it true that after 7 years your credit is clear? ›

Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.

How long does it take for credit score to go up after a hard inquiry? ›

FICO® reports that a hard inquiry will reduce your credit score by five points or less. Your scores should rebound in a few months.

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