What is a hard credit inquiry?
On your credit report, at the end of the report, you will notice a section called “Credit Inquiries.” These inquiries are made by companies that have checked your credit history, usually to judge your creditworthiness for a loan or credit card.
Hard inquiries occur when you apply for new credit, such as a mortgage, car loan, or credit card. But other requests can trigger a hard inquiry, including those pertaining to a new insurance policy, job application, or cell phone.
Whenever this happens, the inquiry is listed on your credit reports, along with the date it was requested. That’s when the two-year countdown to removal begins.
How long do hard inquiries stay on your credit report?
Hard inquiries can remain on your credit report for up to 2 years. Each time a hard inquiry is made, it is recorded by each of the three major credit reporting agencies – Equifax, Experian, and TransUnion. And each time an inquiry is logged, it can potentially impact your credit.
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What is a soft inquiry?
Soft inquiries, on the other hand, occur when a creditor checks your credit without your permission. This could be a lender with whom you’ve talked to for a pre-approval quote but haven’t actually applied for a loan.
By doing a soft credit pull, they can give you an idea of what your rate will be without actually having to do a hard inquiry that will affect your credit.
Sometimes a soft inquiry might even be pulled by an existing creditor just checking on your current credit situation. Another example of a soft inquiry is from a credit card issuer that would like to send you credit card offers.
How long do credit inquiries affect your credit score?
Hard inquiries can affect it by up to 5 points each. Soft inquiries don’t affect your credit at all. Having too many hard inquiries on your credit history at once can indicate to a creditor that you are desperate for money and may be in trouble financially.
They may also assume that you’ve recently opened up a bunch of new accounts and could deny you credit because new lines of credit often take time to show up on your report.
Plus, while 5 points may not seem like a lot, it can quickly add up if you have applied for many loans or credit cards over the last two years.
Even though the impact on your credit scores lessens over time, lenders will still be able to see the full list of inquiries at the bottom of your credit report for a full two years.
Also, remember that the difference between being approved or denied for credit, or getting a lower or higher interest rate, is typically decided based on pre-set score ranges.
If your credit score is on the cusp between “poor” and “fair,” 5-10 points might make all the difference in getting better loan terms.
Those one or two inquiries could be all that is standing between you and better interest rates or access to a loan at all. So while inquiries may not have a huge impact on credit for some people, they can leave a lasting imprint on the financial lives of many.
How important is it to remove inquiries?
Inquiries are the least important items to remove from your credit reports compared to other negative items like missed payments and delinquent debts.
They have a relatively low effect on your credit scores and cause less and less damage over time. Because they only affect your score for 12 months and drop off entirely after two years, inquiries are by no means the worst thing you can have on your report.
Many negative items stay on there for anywhere between seven and ten years. So if your credit history is riddled with several derogatory marks, then removing inquiries should be your last priority as you work on increasing your overall scores.
It often helps to talk to a professional credit repair company to help you analyze your credit reports and prioritize issues that need to be addressed.
Plus, they have the legal know-how of what your rights are with your different creditors and how likely you are to get certain items removed.
Does checking your credit hurt your credit?
If you check your credit, whether you check your credit report or your credit score, it’s also considered a soft inquiry and does not hurt your credit.
Combining Multiple Hard Inquiries
It’s important not to apply for too many types of credit at one time.
However, the credit bureaus understand that people make multiple hard inquiries to compare terms and rates. So, if you’re shopping around for one type of credit, like a mortgage, and make multiple inquiries in a short period of time, they only count as a single inquiry.
This is true for credit cards or an auto loan as well. They do not impact your credit scores as long as they occur within a 30-45 day period.
Don’t start applying for credit until you’re serious about it, then you can stick to this time frame.
If you are just shopping around, you’ll start to have separate inquiries stack up on your credit reports when they are spread out over time. It always helps to have a financial goal with a deadline so you can plan your inquiries in advance.
Lenders have become increasingly lenient in this regard because they know that today’s consumers are more likely to perform their due diligence before making a major financial decision. This includes researching and shopping around for loans to find the best rates and terms.
If you’re not applying for too many types of credit at the same time, then you probably won’t have to worry about disputing inquiries — you can just leave them alone.
However, if you have several different types of inquiries, you may want to consider disputing them because they can add up as lost points. And if your credit score is borderline between two scoring categories, then every few points can make a difference.
How to Get Hard Inquiries off Your Credit Report
Because you often don’t control who checks your credit, your first step is to request a copy of your credit reports to review all of the items listing in the Credit Inquiries section.
Check each item carefully and if it isn’t something that you authorized, you can dispute the item with the credit bureaus. The Fair Credit Reporting Act (FCRA) says that by law, you can dispute any questionable items on your credit reports and they must be investigated within 30 days. If they can’t be verified, they must be removed. There are two ways of doing this.
The first way is to tackle the dispute process on your own. Get the address of each creditor whom you did not approve to perform a hard inquiry.
Then send them a certified letter in the mail (make sure you keep a copy for your records) stating that the inquiry was unauthorized and should be removed immediately.
Here’s a complete list of instructions on our Credit Inquiry Removal Letter page.
If you have other negative marks on your credit reports that need to be dealt with, you may consider hiring a credit repair company.
You probably don’t want to do that if you’re just working on removing inquiries, but if there are other issues then a professional can help expedite the process and save you tons of time dealing with your creditors on the phone and through letters.
To prevent future unauthorized inquiries, consider placing a freeze on your credit report. This option prevents any lenders or creditors from accessing your credit information.
It’s great for preventing identity theft because no one can open a new credit account using your financial information since they won’t get approved without a credit check. However, it also helps prevent unwanted inquiries if you find this to be an ongoing headache.
Placing a freeze on your report and having it removed both incur separate fees in most states, so don’t do this if you’re planning on applying for a new credit card or loan in the near future. But if you anticipate your financials to remain the same for the time being, this can be a convenient option to keep your credit nice and clean.