How credit inquiries affect your credit score

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Ask a Lender
July 18, 2017 | Updated September 22, 2017


Key Points

How inquiries affect your credit score

  • A soft credit inquiry does not affect your credit score.
  • A hard credit inquiry will drop your credit score up to 5 points per pull.
  • Multiple hard credit pulls within 14 to 45 days for the same loan type typically register as one inquiry.
  • Different lenders may have different credit criteria for the same type of loan.

Your credit score is an indicator of your reliability as a borrower and one of the determining factors in whether you will be approved for a loan. The very process of seeking credit can affect your credit score, however.

Not all credit requests are assessed equally in the eyes of credit rating agencies. Applying for multiple credit cards, for example, is considered riskier behavior than applying for a mortgage. In turn, applying for a mortgage is considered riskier than simply checking your personal credit score.

Credit inquiries can take two forms: a hard or soft pull. Broadly, a soft pull is a helicopter view of creditworthiness and does not affect your credit score, while a hard pull is a detailed individual assessment in response to a request for financing, and thus impacts your credit.

Soft credit inquiry

A soft credit inquiry does not require your permission or even your knowledge. While they may show up on your credit report, they will not influence your credit score. Common situations resulting in a soft pull include:

  • Checking your own credit. You have the right to check your own credit for free once a year from each of the three major reporting bureaus, Equifax, Experian and TransUnion.
  • Applying for a job. As your credit score is a gauge of not only financial behavior but also personal trustworthiness, employers may check your credit to use as an indicator of your responsibility.
  • Obtaining prequalification for credit. If you apply for loan prequalification — not to be confused with preapproval — the lender typically runs a soft inquiry to get an idea of the range of interest rates for which you qualify. Similarly, if a credit card company wants to market services to you, it may run a soft credit check without your knowledge to see if you are eligible.

Hard credit inquiry

A hard credit inquiry adversely affects your credit score and, consequently, requires your express permission under the Fair Credit Reporting Act. Loan preapproval, a formal loan application or claiming a prequalified loan will all result in a hard credit inquiry. Requesting an increase on a credit line typically takes a hard credit pull, as well.

One hard credit inquiry usually lowers your credit score by at least 5 points and remains on a credit report for 6 months to two years. Exactly how many points will be deducted depends on the length of your credit history and amount of available credit. Those with a shorter credit history and fewer credit accounts will see more of an impact. Credit inquiries do not determine the bulk of your credit score and a single credit inquiry should not have a significant negative effect. Several credit inquiries together, however, can impact your score more severely.

Rate shopping

Comparing loans and shopping around for a lender is an essential part of borrowing wisely. As such, multiple hard credit pulls taken within a span of 14 to 45 days are typically treated as one inquiry. The hard pulls must demonstrate that you are comparing rates on a single loan, however, and not seeking multiple lines of credit.

Mortgages, auto loans and student loans are considered acceptable loan types to shop around for, while multiple applications for credit cards will each register as individual hard credit inquiries. Credit bureaus view seeking several credit accounts in a short period of time as a sign of financial distress.

Lenders vary

While the above guidelines apply to most situations, individual lenders may have different credit requirements for the same type of loan, particularly when it comes to loan prequalification and preapproval. It is important to have a clear understanding of how and when a lender you are working with will access your credit.

Furthermore, the same lender may check your credit multiple times during the same loan approval process. For example, during a home purchase, the lender may perform a credit check when confirming the mortgage application, a credit refresh shortly before closing and a new credit pull anytime the credit report they have on file becomes 90 days old. This is to ensure that the borrower hasn’t obtained new credit accounts during the closing process and become a riskier prospect.

Grey areas

There are several other situations where an organization may check your credit, such as when renting a home or apartment, renting a car, setting up an account with a utility company, purchasing insurance or opening an account at a financial institution. In these instances, the company may perform a soft or hard inquiry, so it is best to clarify beforehand what kind of credit check will be made.

Remember that even though an organization must get your permission before performing a hard credit inquiry, this permission is not always made fully transparent. It may be in the small print of an agreement or on a separate page of clickable terms and conditions when signing an online document. As a soft credit pull does not require your social security number, if a lender or organization requests it, there is a possibility that a hard credit inquiry will be made and you should request clarification.

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