What Is a Hard Inquiry and How Does It Affect Credit History?
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What's a hard inquiry and how does it affect credit history?
Hard inquiries comprise 10% of your FICO credit scores and 5% of your VantageScore credit scores. Oscar Wong/Getty
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- A hard inquiry is a request from lenders to view your credit report when you apply for credit.
- Hard inquiries no longer affect your credit score after a year and fall off your credit report after two years.
- While hard inquiries lower your credit score, soft inquiries do not affect your credit at all.
- See Insider's list of the best credit monitoring services »
When you apply for a loan, a lender will pull your credit report, known as a hard inquiry or hard pull, to assess the risk that you pose as a borrower. Hard inquiries are recorded on your credit report and will lower your credit score by a few points.
Too many hard inquiries in a short period of time will have a greater effect on your credit score, prompting creditors to wonder why you're trying to borrow all this money at once and if you're good for it. However, in moderation, the threat of a hard inquiry lowering your credit score shouldn't stop you from applying for a new line of credit. Read on to see how hard inquiries affect your credit.
What is a hard inquiry?
Hard inquiries trigger when a creditor needs to assess your credit history to determine your risk as a borrower. They're typically pulled when considering applications for new credit accounts but can also be pulled when you're requesting a credit limit increase.
When a creditor does a hard pull on your credit, that inquiry is recorded on your credit report. They're also factored into your credit score calculation by the credit scoring algorithms FICO and VantageScore. They usually lower your credit score by three to seven points.
However, you shouldn't let the credit score drop from opening a new line of credit deter you from opening a new account. As long as you make your payments on time, you stand to gain more from a new line of credit than you lose with the one-time ding on your credit. "In six months from now, that new account is going to start turning into a good thing for your credit report," says Jeanne Kelly, a credit-building coach.
How do hard inquiries affect credit?
Hard inquiries affect your credit because of how credit scores are calculated by credit scoring algorithms. Though we don't know how FICO and VantageScore calculate their scores exactly, we have a rough estimate of the factors considered and how heavily they affect your score. These factors are as follows:
| FICO | VantageScore |
Payment history (35%) Credit balance (30%) Length of credit history (15%) New credit (10%) Mix of credit accounts (10%) | Payment history (40%) Length & type of credit (21%) Percent of credit used (20%) Total debt/balances (11%) Recent credit behavior and inquiries (5%) Available credit (3%) |
Under FICO, hard inquiries fall under "new credit," accounting for 10% of your FICO score. VantageScore puts less on inquiries, making just 5% of your credit score. Inquiries don't impact your score very heavily, which is why one inquiry will only result in a single-digit drop in your credit score. However, they still affect your credit score, so it's important to be mindful of how often you take out a loan or open a credit card.
For a less mechanical explanation of hard inquiries, you can think of hard inquiries from a creditor's perspective. When a loan application triggers a hard inquiry, it signifies that a consumer is requesting to open a new line of credit. While a single inquiry in a blue moon won't raise much concern, too many hard inquiries, and Kelly says that a creditor might wonder, "why is this person getting credit? What's happening? Why do they need all four or five new accounts?"
Additionally, the more credit accounts you own, the higher your total monthly payments will be. The higher those payments are, the less likely you are to pay them off.
Note: Credit scoring algorithms allow you a rate-shopping window when applying for loans. All the hard inquiries you rack up in this 30-45-day period will only be calculated as one hard inquiry.
Soft vs. hard credit inquiries
Not all credit checks are considered hard pulls. In fact, the vast majority of credit checks are considered soft inquiries. These pulls on your credit report don't involve credit or borrowing money. For example, landlords often run credit checks when reviewing an apartment rental application to see how reliably you make your payments.
Other instances where third parties pull soft inquiries involve credit checks for insurance underwriting, credit checks for employment, and credit checks from creditors for pre-approved offers. Whenever you request to see your credit report through AnnualCreditReport.com, that also counts as a soft inquiry. Some of the best credit monitoring services also supply you with credit reports, which will appear as soft inquiries on your credit reports.
Note: Normally, you can view one credit report per year from each of the three major credit bureaus. However, until the end of 2023, you can request weekly credit reports.
There are several key differences between a hard inquiry and a soft inquiry. Most notably, soft inquiries don't affect your credit score. Not only don't they affect your credit score, but creditors can't even see your soft inquiries. They're only visible on the credit reports you request. You can find the full list of differences below.
Hard inquiry | Soft inquiry |
Hard inquiries lower your credit score by a few points | Soft inquiries have no effect on your credit score |
Hard inquiries are visible to any creditors viewing your credit reports | Soft inquiries are only visible to a consumer checking their own reports |
Hard inquiries are triggered in credit-related appraisals | Soft inquiries are used for non-credit reasons, like apartment rentals or insurance purposes |
Credit report inquiry frequently asked questions
You cannot remove an accurately reported hard inquiry on your credit report, even if your credit application was denied. However, if you notice a hard inquiry on your credit report that you don't recognize, you can dispute your credit report with the credit bureaus. These inaccuracies may come from a hard inquiry that a lender pulled without your permission. More severely, you may be a victim of identity theft, which means someone is trying to open a new line of credit using your personal information.
No, a hard inquiry just signals that a creditor pulled your credit report to review an application. They can still reject your application after pulling your credit report.
Credit scoring algorithms stop factoring a hard inquiry into their calculations after one year. That inquiry falls off your credit report entirely after two years.
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