Do Credit Inquiries Hurt Your Score?

What is the difference between a hard and soft inquiry?

A hard inquiry, sometimes called a hard pull, happens when you apply for new credit and a lender checks your report to make a lending decision. A soft inquiry happens when there is no application, such as when you check your own credit, when a card issuer prescreens you for an offer, or when an existing creditor reviews your account. Only hard inquiries can affect your score.

Checking your own credit is always a soft pull and never lowers your score, so you can pull your reports as often as you like. You are entitled to free weekly reports from all three bureaus at AnnualCreditReport.com, and reviewing them regularly is one of the smartest habits you can build.

How much does a hard inquiry actually lower your score?

For most people with a healthy file, a single hard inquiry costs only a few points, and the impact is temporary. The scoring drag usually fades within a few months, well before the inquiry itself disappears. Hard inquiries fall off your report after two years, and most scoring models stop counting them long before that.

• A single hard inquiry typically costs a small, temporary number of points.
• The scoring effect generally fades within a few months.
• Hard inquiries fall off your credit report after two years.
• Soft inquiries, including checking your own credit, never affect your score.

How does the rate-shopping window work?

When you shop for a single loan, such as an auto loan or a mortgage, scoring models are built to reward comparison shopping rather than punish it. They bundle multiple hard inquiries of the same type that happen inside a focused window and count them as a single inquiry. That way you can gather quotes from several lenders without your score dropping once for each application.

The length of that window depends on the scoring model and generally runs somewhere from about two weeks to 45 days. Because you cannot know in advance which model a lender uses, the safest move is to keep your serious rate shopping inside about two weeks. Do your homework, then apply to your short list of lenders in a tight cluster.

When do inquiries actually matter?

Inquiries carry more weight when your file is thin or already damaged, because there is less positive history to offset them. They also matter when you apply for many different kinds of credit in a short span, since a burst of unrelated applications can signal risk to a lender. Applying for a card, a store account, and a personal loan in the same week is very different from shopping one auto loan.

How do inquiries compare to the rest of your score?

Put inquiries in perspective. Payment history is the heaviest factor at about 35 percent, and amounts owed, which includes how much of your available credit you are using, is about 30 percent. Inquiries are a small slice by comparison. If your goal is a better score, paying on time and keeping your balances low will move the needle far more than avoiding an occasional application.

It is also worth knowing what an inquiry cannot do. An inquiry never removes accurate history and never explains a low score by itself. If you see hard inquiries on your report that you do not recognize, those may be inaccurate or unauthorized, and you have the right to dispute inaccurate, outdated, or unverifiable items yourself for free with each bureau under the Fair Credit Reporting Act. No one can remove an accurate, authorized inquiry, but you should never have to live with a false one.

Most people can manage inquiries on their own by spacing out applications and shopping loans in a tight window. If you would rather hand off the paperwork of reviewing your reports and disputing genuinely inaccurate items, a done-for-you service like Monica Fixes Credit exists for exactly that. Either way, the tools are free, the disputes are yours to file, and the Consumer Financial Protection Bureau publishes guidance to help you do it.