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Someone performing a hard inquiry on a credit file
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What Is a Hard Inquiry?

Brooke Vaughan // August 4, 2021

In personal finance, there are about as many things to keep track of as there are sheep in Scotland (spoiler: There are 6.6 million sheep in Scotland.) Your budget, debt, credit score — it all feels high stakes and takes careful monitoring. When it comes to credit, the slightest change can send ripples through your credit score. A hard inquiry is one small thing that can make an impact. So what is a hard inquiry, and how does it affect your credit score?

What Are Inquiries on Your Credit Report?

Inquiries are used by credit card issuers, lenders, and other organizations to check your credit report and assess your creditworthiness. Lenders are most interested in how reliable you are with repaying your credit, how much new credit you’ve applied for recently, and what your current balances are. This information helps them decide whether to approve you for their financial product or service.

There are two types of inquiries: soft inquiries and hard inquiries. Soft inquiries, sometimes called soft credit checks, occur when an authorized individual or company runs a credit check for a reason unrelated to lending you money. For instance, it is considered a soft inquiry when you request to check your own credit report. A potential landlord or utility company may also make a soft inquiry to see your payment history before approving an application.

Hard inquiries, on the other hand, are most often used when lending is involved. After you apply for a new line of credit — such as a credit card, auto loan, personal loan, mortgage, or other type of loan — the lender will contact the credit bureaus to inquire about a copy of your credit report, which will give them an idea of your credit landscape.

How Do Lenders Use Hard Inquiries?

After requesting your credit file from the credit bureaus, lenders review your payment history, credit utilization, and other factors to determine if they want to bring you on board as a customer.

If lenders can see from your credit file that you have a poor payment history, overextend your credit usage, or have recently applied for a number of lines of credit that you may not be able to repay, they could label you as a risk. Depending on how risky you are, lenders might charge you higher interest rates on credit cards and loans, or be hesitant of lending you money altogether.

How Do Hard Inquiries Affect Your Credit Score?

Unfortunately, hard inquiries negatively impact your credit score because they reflect the risk of you opening a new line of credit and potentially not being able to pay for it. Luckily, hard inquiries only cause your score to drop a few points and linger on your report for a short amount of time.

Hard inquiries are a part of the new credit slice of your credit score, which only accounts for 10% of the final number. The rest of your credit score is determined by: payment history (35%), credit utilization (30%), credit history length (15%), and credit mix (10%).

According to FICO, a data analytics company with one of the most commonly used credit score models, although the effects range from person to person based on their credit history, FICO scores only tend to drop about five points for each hard inquiry. For reference, FICO scores range from 300–850.

Too many hard inquiries in a short period of time raises suspicion among lenders, as you may be experiencing financial hardship and applying for credit to keep your head above water.

This is especially important to keep in mind when rate shopping, as you’ll be applying for several lines of credit to compare rates. Credit scores tend not to penalize you for rate shopping by recording multiple hard inquiries as a single occurrence as long as you keep your shopping to a 14-to-45-day window.

When you’re shopping for an apartment, most leasing offices will only run a soft inquiry when you apply; however, some offices conduct hard inquiries depending on their leasing process, so it’s important to confirm with them which avenue they will take before submitting your application.

How Long Does a Hard Inquiry Last?

A hard inquiry will remain on your credit report for up to two years but typically only affects your score for a few months. If you apply for a loan, credit card, or other type of credit, you will see a small drop in your score, but it will bounce back quickly as long as you make on-time payments and keep your credit utilization in check.

How to Manage Hard Inquiries

Hard inquiries can be unavoidable, but they’re not always a bad thing. Opening new lines of credit can help diversify your credit mix and eventually boost your credit score if you’re keeping up to date on your payments and using credit responsibly.

As with most things associated with finances, you shouldn’t take your credit score for granted and let hard inquiries get out of control. Doing so could cause your credit score to drop more than you had anticipated, and make it more difficult to stay up to date on payments.

To manage hard inquiries on your credit report effectively don’t apply for too much credit too often. If you are planning to apply for a large line of credit, such as a mortgage, try not to apply for other lines of credit, like credit cards, just prior to your larger application. This can help you keep your credit score as high as possible so lenders are more likely to approve your loan and give you a better interest rate.

How to Remove Hard Inquiries

Because hard inquiries typically only dock a few points from your credit score and affect it for a short amount of time, getting one on your credit report is not the end of the world.

However, if you review your credit report and notice that a hard inquiry has been added by mistake, it’s important that you dispute it with the credit bureaus as soon as possible. Not only will this help you avoid having points removed from your credit score, it could also help you catch identity theft if someone has fraudulently applied for a line of credit using your information.

Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.

*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.