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How much does a hard inquiry affect your credit score?
Hard inquiries affect your credit score, but they’re one of the least important factors. In FICO’s scoring models, hard inquiries (also known as hard pulls) are only one component in the New Credit category, which itself only accounts for 10% of your credit score. Factors like your payment history (which accounts for 35% of your score) and your credit utilization (30%) are much more influential.
You’ll usually get a hard pull on your credit report when you apply for the following:
- Credit cards
- Secured and unsecured loans (like a car loan, student loan, personal loan, or mortgage)
- Phone or utility contracts
- Apartment rentals (if your landlord decides to check your credit; note that they can also choose to conduct a soft inquiry instead, which won’t hurt your score)
Why do hard credit inquiries lower your score?
Hard credit inquiries lower your score because they mean you’re applying for new credit, which suggests you might be struggling financially. Statistically, you’re up to eight times more likely to file for bankruptcy if you have six or more hard inquiries on your credit report. 2
Fortunately, as soon as you demonstrate that you’re using your new credit responsibly (which means making payments according to your repayment schedule if it’s an installment loan and making all your minimum monthly payments on time if it’s a revolving credit account), your score will recover quickly.
How long it’ll take for your credit score to fully recover after a hard inquiry depends on various factors. You can expect it to take three to six months for your VantageScore credit score and no more than one year for your FICO credit score.
Removing a hard inquiry from your credit report
You usually can’t remove a hard inquiry unless the bureau added it to your report by mistake, so you’ll have to wait two years before the inquiry will fall off your report. However, as mentioned, your score will recover after a few months to a year.
How many hard inquiries are too many?
In general, you should aim to have as few hard inquiries as possible while still obtaining the credit you need. There’s no clear point at which you have too many hard inquiries—just be aware that each new hard pull will bring down your score, except if they occur within a short space of time.
Multiple hard inquiries count as one when you’re rate shopping
When you’re rate shopping for an auto loan, a student loan, or a mortgage, FICO will treat multiple hard inquiries that you trigger within a 45-day period as a single hard inquiry. 6 There’s also a 30-day grace period before hard inquiries of those types start to affect your score at all. 4
Similarly, VantageScore treats any hard inquiries that occur within a 14-day period as a single hard inquiry.
These exceptions only apply to hard inquiries of the same type, and they only apply to auto loans, student loans, and mortgages. They don’t apply to hard inquiries for other types of credit, such as credit cards.
This means that if you apply for five auto loans in a short period, those will be counted as one hard inquiry. However, if you apply for an auto loan, a mortgage, and a personal loan, those will be counted as three separate inquiries, and each will lower your score. Similarly, five hard inquiries for credit cards will be counted as five separate hard inquiries.
FICO and VantageScore have put this exception in place because they know that responsible borrowers often shop around before taking out loans, and doing so doesn’t signify that they present a risk to lenders.