A hard credit inquiry will cause your credit score to drop by around 5-10 points on average. If you have a strong credit history, your credit score could take less of a hit. Hard credit inquiries only remain on your credit report for two years, and no longer impact credit scores after one year. Maintaining positive credit habits and paying off bills on time will rebuild your score, and the impact of hard inquiries will vanish over time.
Hard credit inquiries occur when you apply for a new loan or line of credit, like a new credit card or mortgage. While one inquiry may lower your score, multiple hard inquiries on a credit report in a short period of time can cause more damage. So if you’re trying to build credit, you don’t want to apply for a new credit card and then shortly after take out a personal loan if a mortgage is also in your near future, for example. Research from FICO shows that people with six inquiries or more on their credit reports are eight times as likely to file for bankruptcy as those with none.
If you’re shopping around for a mortgage or auto loan, you’ll want to find the best rate, and lenders will make multiple hard checks within a short period of time. Both FICO and VantageScore credit scores account for this and include a grace period while shopping around. Depending on which scoring model is used, the grace period is 14, 30, or 45 days. VantageScore has a 14-day window and any inquiries during that time are counted as one, regardless of what type. Newer FICO models ignore auto loan, student loan, and mortgage inquiries made 30 days before your score updates. Some FICO scores also look for older hard inquiries and group those made in a 45-day period into just one inquiry.
Hard inquiries don’t make up a large part of your credit score. VantageScore counts them as one of the least influential pieces your total score, while FICO counts them as part of the “new credit” category that only represents 10% of your score. Not all credit inquiries impact your credit score, either. Soft inquiries occur any time you check your own score, employers run a background check, creditors review the terms of your existing account, or creditors pre-screen or pre-approve you for a new offer. Soft credit pulls have no effect on your credit score.
You can see any recent hard inquiries on your TransUnion credit report and how they’ve affected your credit score by signing up for a free WalletHub account.
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