How Hard Inquiries Affect Credit Score

A hard inquiry is a check on your credit when you apply for some form of credit. They remain on your credit report for about two years. Despite the length of time the inquiry stays on your report, it negatively affects your credit score for about a year.

Stated by a Chicago credit repair expert, In some instances, the hard inquiry will not affect your credit score at all. The trouble arises when you apply for a lot of credit in a short amount of time. For example, if you are applying for a mortgage, your credit score might be affected if you have several banks and lenders looking at your credit. Applying for student loans or auto loans at several organizations could negatively affect your credit score, too.

How Much Does the Inquiry Affect Your FICO Score?

The answer to the question is based on your credit score before the hard inquiries begin. For example, if you have good credit and you are applying for a new car loan, it is unlikely that the inquiry will even knock a point or two off of your score. However, if your credit score is already low, hard inquiries might hurt.

People who are building their credit need to be aware of the number of hard inquiries they make. When credit scores are figured, new credit inquiries only account for 10% of FICO scores. So, if you have minimal credit, your score could be changed more significantly than those who have well-established credit.

A good way to keep your credit good is to wait at least three months between the inquiries. Because every point matters, you should pay attention to the number of hard inquiries you have. Your credit report can affect the interest rate you receive from your lender. Therefore, when you are applying for big-ticket items like a home or a new car, be sure that you haven’t applied for credit in the last three months to a year.

Avoid Multiple Hard Inquiries

A credit check might happen at unexpected times. While you have to give approval before someone checks your credit, it is checked in time when you aren’t getting a credit card or a new car. For example, when you rent an apartment, the leasing agency will look into your credit. If you open a bank account, the bank might check your credit. These types of credit checks can add up quickly.

Lenders are reluctant to lend to people with too many credit inquiries. The statistics show that people with numerous inquiries in a short amount of time are more likely to file for bankruptcy than those who don’t.

Stay Aware Of Your Credit Score and History

Fortunately, you can check your credit report at any time and dispute inquiries that appear to be done in error. It isn’t easy to fix credit, but it is possible over time. While you follow your credit score and history to watch for unexpected hard inquiries, you should also take care to pay attention to the other factors that go into your credit report. So make your payments on time, and keep your credit card balances below 30% of your total credit limit.