Understanding Hard Inquiries on Your Credit Report

Some consumers are reluctant to check their credit reports because they are concerned that doing so may impact their credit scores. While pulling your own credit report does result in an inquiry on your credit report, it will not affect your credit score. In fact, knowing what information is in your credit report and checking your credit may help you get in the habit of monitoring your financial accounts.

One of the ways to establish smart credit behavior is to understand how inquiries work and what counts as a “hard” inquiry on your credit report.

What is a hard inquiry?

When a lender or company requests to review your credit report as part of the loan application process, that request is recorded on your credit report as a hard inquiry, and it usually will impact your credit score. This is different from a “soft” inquiry, which can result when you check your own credit or when a promotional credit card offer is generated. Soft inquiries do not impact your credit score.

Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year. Depending on your unique credit history, hard inquiries could indicate different things to different lenders.

Recent hard inquiries on your credit report tell a lender that you are currently shopping for new credit. This may be meaningful to a potential lender when assessing your creditworthiness.

Exceptions to the impact on your credit score

If you’re shopping for a new auto or mortgage loan or a new utility provider, the multiple inquiries are generally counted as one inquiry   for a given period of time. The period of time may vary depending on the credit scoring model used, but it's typically from 14 to 45 days.  This allows you to check different lenders and find out the best loan terms for you.

All new auto or mortgage loan or utility inquiries will show on your credit report; however, only one of the inquiries within a specified window of time will impact your credit score. 

This exception generally does not apply to other types of loans, such as credit cards. All inquiries will likely affect  your credit score for those types of loans.

Plan before shopping for a loan

Before shopping for a loan, it’s always smart to proactively plan your finances.

First, learn whether the type of credit you’re applying for can have its hard inquiries treated as a single inquiry. Multiple inquiries from auto loan, mortgage or student loan lenders typically don’t affect most credit scores.

Second, you may also want to check your credit before getting quotes to understand what information is reported in your credit report. You are entitled to receive one free copy of your credit report every 12 months from all three major credit bureaus – Equifax, Experian and TransUnion – by visiting annualcreditreport.com.

If you’re worried about the effect that multiple hard inquiries may have on your credit report, it may be tempting to accept an offer early rather than allow multiple hard inquiries on your credit. However, consider your individual situation carefully before cutting your shopping period short. In many cases, the impact hard inquiries have on your credit score from shopping around may be less impactful than the long-term benefits of finding a loan with more favorable terms.

The more informed you are about what happens when you apply for a loan, the better you can prepare for the process. Learning more about credit inquiries before you go loan shopping may help you prepare for any impact they might have on your credit score.

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