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Last update: August 13, 2024
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How long do credit inquiries affect your credit score? Learn about the effects of hard and soft inquiries, plus strategies to minimize their effect on your financial health.
By Brian Flaherty, B.A. Economics
Edited by Rachel Lauren, B.A. in Business and Political Economy
Learn more about our editorial standards
By Brian Flaherty, B.A. Economics
Edited by Rachel Lauren, B.A. in Business and Political Economy
Learn more about our editorial standards
When you're trying to build or maintain a good credit score, understanding the difference between hard and soft inquiries is crucial. "How long do credit inquiries affect your credit score?" is a hot topic, especially among people looking to refinance student loans, or get their finances in order. In this post, we'll tackle this question and more.
Credit inquiries, especially hard inquiries, can seem challenging. When a lender pulls your credit report to assess lending risk, a hard inquiry is made.
But how long do these inquiries affect your score? Generally, hard inquiries stay on your credit report for up to two years, but their effect on your score fades much faster.
A hard inquiry can reduce your credit score by up to five points, though this effect diminishes within a few months. The exact effect depends on your overall credit profile. For example, if you already have good to excellent credit, the drop is usually less significant.
After about a year, the effect of that hard inquiry on your credit score is minimal. Most scoring models, including FICO, no longer consider it after 12 months. VantageScore, however, considers hard inquiries for two years. The inquiry itself also remains on your report for the full two years.
When shopping for the best mortgage or auto loan rates, multiple inquiries within a short time frame (usually 14 to 45 days) are typically treated as a single inquiry. This practice allows you to compare loans without being excessively penalized.
Understanding the difference between hard and soft inquiries is vital. A soft inquiry, like when you check your own credit report or when employers pull your report for background checks, doesn’t affect your credit score.
Soft inquiries aren’t visible to potential lenders and have no effect on your creditworthiness. For more details, check out our resources on student loans.
Reducing the effect of hard inquiries involves strategic planning:
You can't remove a legitimate hard inquiry from your report. But if you come across one you don't recognize, it could be a sign of identity theft.
In such cases, you can dispute the inquiry. For more on handling disputes and removing inaccuracies, consider services offering FAFSA assistance.
Hard and soft inquiries differ significantly in their effect on your credit report. Hard inquiries occur when lenders check your credit for applications like mortgages, credit cards, or other types of loans.
They can lower your credit score by up to five points and stay on your report for up to two years. However, they usually lose their effect after the first 12 months.
In contrast, soft inquiries happen when you check your credit score yourself or when businesses review your credit for pre-approved offers. These don't affect your credit score.
There are several methods to minimize the effect of hard inquiries before applying for significant loans:
Using these steps can protect your credit score from dropping unnecessarily. For more strategies, consider learning about the best credit card for your needs.
When applying for major loans like a mortgage or auto loan, you might worry about multiple hard inquiries. However, credit scoring models like FICO and VantageScore group multiple inquiries as one if they occur within a 14 to 45-day window. This grouping permits you to shop around for the best rates without damaging your credit score.
Applying for several types of credit within a short period can cause more issues. If a lender sees numerous hard inquiries for different types of credit like credit cards, personal loans, or home equity loans, they might suspect financial trouble.
Having too many hard inquiries may signal financial instability to lenders. This perceived risk can result in higher interest rates or even loan denials.
It's possible to encounter hard inquiries you don’t recognize, which may indicate identity theft. Disputing such inquiries involves contacting the credit bureau to have them removed. Legitimate inquiries remain for the two-year period, but inaccurate ones can be disputed.
Below is a table summarizing important data about credit inquiries' effects and timelines to provide a clear understanding:
Type of Inquiry | Credit Score Impact | Duration on Report | Typical Applications |
---|---|---|---|
Hard Inquiry | Up to 5 points | Up to 2 years | Mortgages, credit cards, loans |
Soft Inquiry | None | Not recorded | Checking own score, pre-approvals |
Grouped Inquiries | Minimal (if within 14-45 days) | Up to 2 years | Mortgage or auto loan shopping |
Understanding these dynamics enhances your ability to navigate financial decisions and manage your credit score effectively.
When managing credit inquiries, it’s essential to navigate the process smartly to protect your credit score. Below are critical dos and don'ts to help you avoid pitfalls and make informed decisions.
Check your credit report regularly
Shop for loans within a 14 to 45-day window
Dispute unauthorized hard inquiries
Keep credit card balances low
Use credit monitoring services
Apply for multiple types of credit in a short timeframe
Ignore inaccuracies on your credit report
Panic over a single hard inquiry
Close old credit accounts suddenly
Apply for new credit if planning a big loan soon
Monitoring your credit score has different benefits and drawbacks. Understanding these can help you decide how best to manage and improve your credit effectively.
At TuitionHero, we help students and parents navigate financial landscapes and manage student loans. Our platform connects you to lenders for private loans, refinancing, and scholarships. We simplify the FAFSA process and offer student-friendly credit cards. Use our services to improve your financial health and ensure a smooth educational journey.
Too many hard inquiries within a short period could signal financial instability to lenders, potentially resulting in higher interest rates or denial of credit applications. It's crucial to manage your credit applications wisely to avoid raising red flags.
While legitimate hard inquiries can’t be removed from your credit report, you can dispute any inaccuracies. If a hard inquiry appears that you don’t recognize, contact the credit bureau to investigate and potentially remove it.
When shopping for loans, credit scoring models like FICO group multiple inquiries within a short timeframe (14 to 45 days) into a single inquiry. This practice allows you to compare loan offers without significantly hurting your credit score.
Understanding the effect of credit inquiries on your credit score is crucial for maintaining financial health. By being mindful of the differences between hard and soft inquiries, strategically timing your credit applications, and disputing inaccuracies, you can protect and even improve your credit score. Remember, informed decisions today can lead to better financial opportunities tomorrow.
Brian Flaherty
Brian is a graduate of the University of Virginia where he earned a B.A. in Economics. After graduation, Brian spent four years working working at a wealth management firm advising high-net-worth investors and institutions. During his time there, he passed the rigorous Series 65 exam and rose to a high-level strategy position.
Rachel Lauren
Rachel Lauren is the co-founder and COO of Debbie, a tech startup that offers an app to help people pay off their credit card debt for good through rewards and behavioral psychology. She was previously a venture capital investor at BDMI, as well as an equity research analyst at Credit Suisse.
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