A hard inquiry on your report is “when an individual applies for any type of credit, such as a mortgage, credit card or auto loan,” according to Investopedia.
Having too many hard inquiries on your credit report lowers your credit score because it paints you as a risky borrower. A regular pattern of hard inquiries could reveal irresponsibility and poor money management.
But how many is too many?
Let’s start with the basics
Your credit score is a combination of many factors:
- Open credit card utilization rate
- Percentage of on-time payments
- Length of your credit history
- Number of derogatory marks on your credit reports
- And, of course, hard inquiries
Although it’s a minor factor, you shouldn’t overlook the potential inquiries have to damage your credit reputation. Each variable contributes to the calculation, ultimately affecting your credit-worthiness and your overall score.
You won’t get hurt for every kind of inquiry. In fact, there are some credit inquiries that won’t impact your score at all.
Hard Inquiries vs. Soft Inquiries
You may feel a bit nervous with all this talk of ruining credit scores. Don’t worry, though. Not all inquiries contribute to the equation. In fact, soft inquiries happen all the time and don’t affect your credit score.
Types of soft inquiries include:
- Using Credit Karma to check your score
- “Pre-qualified” offers for credit cards
- “Pre-qualified” quotes for insurances
- Background checks
When you submit an application for credit, however, you’ll face a hard inquiry.
Each time you apply for more credit, more companies will ask for your credit score. This includes any type of credit application, including credit cards, mortgages, apartment rentals, student loans, auto loans and personal loans
The more you ask for credit, the more hard inquiries you register on the score. If you acquire enough of them, you’ll start to feel the damage.
Disputing Hard Credit Check Inquiries
It’s important to check your credit report often. If you spot any errors in the calculations, you’ll want to remove it as soon as possible.
After all, a few points may mean the difference between a yes or a no.
So, you’ll want to bring it to the attention of the credit bureau, as well as contact the Consumer Financial Protection Bureau (CFPB) for help if necessary. USA Credit Repair’s experienced professionals can take care of this for you!
Otherwise, a hard inquiry can take almost two full years to fall off your credit reports.
The Impact on your Credit Score
The overall impact from applying for credit depends on situation to situation. Sometimes it changes the credit history, while other times it may have little to no impact on the FICO score.
On average, it lowers your score about 5 points (on a scale of 300-850) per hard credit inquiry. They can have a greater impact if you have multiple accounts or a shorter credit history.
This is why it’s important to spread out your credit borrowing habits to a larger period of time, so that you are not bombarding the system with requests. You should build up your credit score over time, so that you have a higher score and are treated as a highly reliable person.
If you’re worried about hard inquiries affecting your credit score, USA Credit Repair can help. We’ve helped more than 800,000 people improve their credit score and get back on track to financial freedom. We can help you too! Contact USA Credit Repair today!