What is a hard inquiry and how does it affect credit history?

  • A hard inquiry, also known as a hard pull, is a request to check your credit when you apply to borrow money through a credit card or loan.
  • Each difficult inquiry will lower your credit scores by a few points.
  • A hard inquiry stops counting in your credit score after one year and disappears entirely from your credit report after two years.
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When you apply for a job, a potential employer may run a background check to make sure you’re not taking what they see as unnecessary risk by hiring you. Similarly, when you apply for a loan, a lender will run a credit check, known as a deep investigation or hard draw, to assess your risk as a borrower.

A thorough inquiry can slightly hurt your credit score, but you shouldn’t let that stop you from applying for a new line of credit.

What is a hard query?

When you apply for a money loan, the lender will submit an application to a Credit bureau to see your credit history, which is known as a deep inquiry. This will provide them with a comprehensive report of your credit history, so they can assess how risky it is to lend you money.

Unlike soft inquiries, which are used on pre-approved offers that don’t require credit, hard inquiries are recorded on your credit report. They are also factored into the calculation of your credit score, which typically lowers your credit score by three to seven points.

However, you shouldn’t let the drop in your credit score from opening a new line of credit stop you from opening a new account. As long as you make your payments on time, you can earn more with a new line of credit than you lose with a lump sum payment. “Six months from now, that new account will start to turn into something good for your credit report,” he says. Jeanne Kelly, Credit Building Coach.

Why does a hard inquiry affect your credit score?

Your credit score is a measure of how likely you are to pay your debts. When a loan application triggers a deep inquiry, it means you’re applying to open a new line of credit, which adds an additional degree of uncertainty to the likelihood that you’ll keep up with your payments.

While one extensive inquiry can put a dent in your credit score, too many extensive inquiries will add up and significantly lower your credit score. It could also raise red flags for lenders, who will think twice before approving a loan. Kelly says creditors might wonder “why is this person getting credit? What’s going on? Why does he need the four or five new accounts?”

When searching for the best rates on a loan, you can incur multiple difficult queries when submitting applications to multiple lenders. Fortunately, you can rate the store for 30 days after your first inquiry. This means that any hard inquiries you rack up while searching for a loan will only be calculated as one inquiry on your credit score, even though all inquiries will still appear on your credit history.

How long do hard inquiries stay on your credit report?

A hard inquiry will stay visible on your credit report for two years before you drop it. However, it will only count toward your credit score for one year.

You will not be able to remove an authorized hard inquiry from your credit report before those two years are up. However, if you notice a hard inquiry on your credit history that you did not authorize, you can go to the credit bureau dispute center to solve it. These inaccuracies may stem from extensive research that a lender conducted without the lender’s permission, or more seriously, you may be the victim of identity theftwhich means someone is trying to open a new line of credit using your personal information.

Hard query vs soft query

Sometimes a service provider, such as a utility company or a rental apartment owner, will run a credit check on you, even if they don’t offer a line of credit. This is known as a soft query or a soft pull. They do it to see how responsibly you manage your finances. For example, a landlord may not want to rent an apartment to someone with a history of defaulting on her debts.

There are several key differences between a hard query and a soft query. In particular, a soft inquiry does not show up on your credit report. It also does not affect your credit score.

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