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What is a hard inquiry?
When you apply for credit, your prospective lender will usually ask to view your credit history, which will trigger a hard inquiry (also known as a “hard pull” or a “hard credit check”).
Hard inquiries temporarily lower your credit score by a few points, and they’re visible to anyone who accesses your credit report. Most lenders won’t be willing to give you credit without conducting a hard credit check to determine how likely you are to repay your debts.
Applications for the following types of credit will typically trigger a hard inquiry:
- Installment loans (like car loans, student loans, personal loans, and mortgages)
- Revolving credit accounts, such as credit cards and retail cards
- Open credit, such as phone, internet, or utility contracts
Rental applications can also trigger a hard inquiry, but this depends on the type of credit check your prospective landlord conducts. Some landlords conduct a different type of check, known as a “soft inquiry,” instead.
What’s the difference between hard and soft inquiries?
As mentioned, there are two types of inquiries that can appear on your credit report: hard and soft. Soft credit checks have a few notable differences from hard inquiries:
- They’re unrelated to applications for credit (they’re often conducted by landlords and potential employers instead of creditors)
- They don’t hurt your credit score
- Anyone can run a soft credit check without asking your permission or notifying you
- Only you can see them on your credit report
Comparing hard and soft inquiries
The graphic below illustrates the main differences between hard inquiries and soft inquiries.
Why the credit bureaus separate hard and soft inquiries
The credit bureaus and credit scoring models distinguish between these two types of inquiries for a simple reason: hard inquiries show that you’re actively looking for new credit, which is a potential indicator of financial distress and may indicate that you’re a higher-risk borrower. Soft inquiries, on the other hand, have nothing to do with your desire to open new lines of credit.
For example, you may get a soft inquiry if:
- You apply for a job and your prospective employer runs a background check on you as part of their employee screening process.
- You apply for insurance or if a credit card issuer checks your credit to preapprove you for a card. (Preapproval checks don’t trigger hard inquiries because you don’t actively solicit them.)
- You check your own credit, which won’t hurt your credit score.
How many points do hard inquiries take off your credit score?
However, there are several factors, like the length of your credit history, that affect how many points a hard inquiry will take off your score. If you only have one or two credit accounts or your accounts haven’t been open for long, a hard inquiry will usually have a greater effect on your score. 3
Does rate shopping affect your credit?
No, rate shopping doesn’t usually affect your credit. The major credit scoring models don’t want to punish you for being responsible and seeing what interest rates and terms different companies can offer you when you only intend to take out a single loan.
For this reason, they have a rate-shopping window (which they call a “deduping period”) where multiple inquiries for the same type of loan are counted as one. This prevents your credit score from dropping significantly while you look around for the best loan.
VantageScore offers a 14-day grace period, which applies to every type of credit. 4 By contrast, newer FICO models offer a 45-day grace period, but it only covers inquiries for student loans, auto loans, and mortgages. 5
In addition, FICO doesn’t lower your credit score right away when a hard inquiry appears on your credit report. There’s a 30-day buffer period before hard inquiries appear on your report and lower your score.
How long do hard inquiries stay on your credit report?
Hard inquiries stay on your credit report for two years. Any lender who views your credit report can see them during that period. 5
Fortunately, your credit score will probably recover from the inquiry much sooner. The effects will begin to fade after several months.
How to avoid triggering too many hard inquiries
It’s difficult to say precisely how many hard inquiries is too many because different lenders have different standards—there isn’t a universal consensus in the lending industry.
However, your perceived risk as a borrower generally increases with each new credit inquiry. Lenders may deny you a loan or credit card if there are multiple inquiries on your credit report. While being denied a credit card won’t hurt your credit directly, it will force you to apply for other lines of credit, incurring even more hard inquiries.
To minimize the number of hard pulls you receive, follow these tips:
- Only apply for credit when you need it: It generally isn’t worth opening multiple credit accounts if you don’t need them. Be selective about the accounts you apply for.
- Prequalify for cards: Many credit card companies offer pre-qualification tools that you can use to find out if you’re eligible for a card. They only trigger soft inquiries, so you can compare several cards without receiving too many hard inquiries.
- Dispute unauthorized inquiries: You can remove hard inquiries from your credit report if they were unauthorized by filing a dispute with the credit bureau that reported the inquiry. (It’s always worth disputing errors you find on your credit report, including other types of negative marks like late payments and collection accounts.)
While it’s a good idea to avoid triggering unnecessary hard inquiries, having one or two really isn’t something to worry too much about. In fact, FICO reported that in 2019, around 10% of people with the maximum credit score of 850 had one or more hard inquiries from the past year. 7
Hard inquiries have a relatively small impact on your credit score, and they stay on your credit report for a much shorter time than other negative items, which in most cases remain for 7 years.