A hard inquiry, also known as a hard credit check, gives people your full credit report and typically occur when you apply for a loan or credit card. Hard inquiries stay on your credit report for up to two years, are visible creditors, and can decrease your personal credit score by one to five points.
It’s a good rule of thumb to check your personal credit score frequently to understand how your actions have played a role. You can use websites like Nav to check your score for free. When you check your own score, it will count as a soft inquiry and therefore will have no negative impact on your personal credit score.
What a Hard Inquiry Is
A hard inquiry on a credit report occurs when your credit is checked in connection with a loan application. Sometimes hard inquiries occur when you apply for other services, such as utilities, television, or phone. Hard inquiries are used to review your entire credit history, versus the overview provided by a soft credit inquiry.
A soft credit inquiry is usually done without your permission. You can expect soft inquiries for pre-approval processes when you check your own credit score, background checks, and getting an insurance policy. It’s important to note that the new credit score rules for 2019 include credit reporting for services such as phone and utilities so that you might see hard credit checks such as these more often than in the past.
Generally, hard inquiries require that you give some sort of written permission. However, if an entity has “permissible purpose” under the Fair Credit Reporting Act (FCRA) to check your credit, they don’t need explicit consent for a hard credit pull if you initiate a transaction. There are instances when there is an errors or unauthorized hard inquiries on credit reports, which may require you to look into different options for hard credit inquiry removal.
When You Can Expect Hard Inquiries on Your Credit Report
Individuals can usually expect hard inquiries on credit reports when bringing on new financial obligations. For example, applying for a new credit card or loan, getting a new cellphone contract, or requesting an increase in your credit limit. Most creditors review your full credit history when you take on a new monthly payment.
Four examples of when to expect hard credit inquiries are:
- Applying for a credit card or loan: Individuals applying for consumer loans like auto loans, mortgages, and student loans or a personal credit card, can expect to receive hard inquiries credit reports; for these types of transactions, lenders and creditors generally want to review your full credit history to evaluate your creditworthiness
- Applying for a business loan: Business owners looking to access funds through a Small Business Administration (SBA) loan or working capital loan, will typically see hard inquiries on their personal credit report; business credit reports aren’t penalized for inquiries because anyone can pull a business report with the address and name of the business
- Applying for other services: A new service including utilities, television, or cellphone contract usually means a new monthly payment; a hard credit check is likely in this situation to determine if you can afford a new financial obligation
- Requesting a credit limit increase: Increasing your credit limit is comparable to applying for a credit card; typically, credit providers will want to look over your full credit history to ensure you can manage a higher limit
It’s important to review your credit report and score once a quarter to ensure everything is accurate and dispute errors once you see them. If you’re a business owner and you want to avoid hard inquiries altogether, consider a business loan with no credit check. Instead, business loans will typically rely on accounting data like business transactions, number of invoices, and number of customer relationships.
How Hard Inquiries Affect Your Credit Score
Hard credit inquiries will affect your credit score for one year but stay on your credit report for two years. You can minimize this impact if your rate shopping by keeping inquiries within a 30-day window. Soft credit pulls, on the other hand, have no impact on your score and aren’t visible to anyone who pulls your credit.
For perspective, person credit scores range from 300 to 850. Five points may not seem like much, but if you’re on the borderline of a good credit score like 670 or higher, it might drop you down into a fair or poor personal credit score range ― 580 to 669. Lenders generally see too many hard credit inquiries as a sign of financial distress and may make them wonder if you’re a risky borrower.
Hard inquiries affect your credit score differently if you are rate shopping. Credit bureaus like FICO and VantageScore understand that people want the find the best rates and have rules that allow you to get several rate quotes while only counting as one inquiry.
The financial situations when rate shopping affects your credit score are:
- Rate shopping for home mortgages (30 to 45 days): FICO groups together all hard credit checks from home mortgage companies in a 30-day window and treats them as a single inquiry; any additional hard credit checks run in the next 45 days are treated as a single additional check
- Rate shopping for car loans (30 to 45 days): FICO also groups together hard credit checks from car loan companies in a 30-day window and only counts them as a single inquiry; any additional hard credit checks run in the next 45 days are treated as a single additional check
- Rate shopping for student loans (30 to 45 days): FICO also groups together all hard credit checks for student loans in a 30-day window and treats them as a single inquiry; any additional hard credit checks run in the next 45 days are treated as a single additional check
Vantage Score, on the other hand, lumps together all inquiries made during a 14-day window together as one for scoring purposes. A good rule of thumb with a hard credit inquiry is that you can have up to two inquiries on your report at one time with no major impact. Once you exceed two inquiries in a two-year period, your personal credit score may begin to drop significantly.
How Long Hard Inquiries Stay on Your Credit Report
Hard credit inquiries stay on your personal credit report for two years. Hard inquiries are visible to anyone else who does a hard pull but won’t impact your personal credit score after the first year. After those two years, you can start to earn those points you originally lost from a hard inquiry.
Losing a couple of points from an inquiry is not the end of the world. During the two years that they are on your credit report, you can focus on a few different things to help you improve your personal credit score like timely payments, monitoring your credit use, and reviewing your personal credit report.
A few key things to focus on when you have hard inquiries on your credit report are:
- Reduce any new credit applications: A new application for a credit card or loan will typically require a hard credit check; to minimize the credit score impact, it’s best to hold off on any new credit applications or keep your inquiries within a 30-day window if you are rate shopping
- Focus on your payment history: Make all your payments as expected, including credit card payments, car loans, and monthly housing expenses
- Lower your credit utilization: Keep your credit utilization below 30% of your available credit limit; there are many different tips to improve your credit utilization to help you increase your personal credit score
- Order and review your credit report: Check your personal credit report annually to ensure that it’s accurate and monitor it for any errors; you can get a free personal credit report once a year through AnnualCreditReport.com
- Work on improving business credit: If you have hard inquiries on your personal credit report, don’t forget to focus on maximizing your business credit in case you need to apply for a business loan or credit card
Staying on top of your payment history, credit utilization, and credit report can help you improve your personal credit score or maintain an already good score. If you happen to come across errors, it’s worth looking into submitting a dispute to remove them from your report.
How to Dispute Hard Inquiries on Your Credit Report
Although hard inquiries stay on your credit report for two years, you can dispute any errors. To dispute hard inquiries, send a letter to the credit bureau that generated the report and explain the error. If you do decide to file a dispute, credit report agencies have 30 to 45 days to investigate the error and respond.
Three steps to dispute hard inquiries on your credit report are:
- Contact credit reporting company: Tell the credit reporting company what information of your credit report is incorrect and include copies of documents that support your dispute; using a sample letter can help you provide concise information
- Contact information provider: Tell the credit card company or the entity that reported your information that you filed a dispute for an item on your credit report and include any copies of documents that support your dispute; a sample letter will help you in this step of the process
- Wait for a response (30 to 45 days): After you contact both the credit reporting company and information provider, credit reporting agencies have between 30 and 45 days to investigate and respond to your dispute
Remember that any hard inquiry that was done without permission can be disputed and potentially removed. Disputing errors or unauthorized credit inquiries immediately is important because of the negative impact they can have on your personal credit score. If you need to repair your credit beyond this, consider contacting a credit repair company.
Frequently Asked Questions (FAQs) About Hard Inquiries
We covered a lot of different pieces of information about hard inquiries and how long hard inquiries stay on your credit report. Some questions are asked more often than others, and we address those here. If you have any more unanswered questions, please feel free to leave a comment below or visit the FitSmallBusiness forum, and we will provide an answer.
What Is a Hard Inquiry on a Credit Report?
Credit inquiries are requests from either banks, lenders, or businesses to check your personal credit. Hard inquiries on credit reports indicate that a potential lender or creditor is reviewing your full credit report and history. These types of hard credit checks typically happen when you’ve applied for a loan, mortgage, or credit card.
How Long Are Hard Inquiries on Credit Reports?
Hard inquiries stay on your personal credit report for two years and are visible to anyone that does a hard credit pull. Hard inquiries can hurt your personal credit score and each inquiry can decrease your score by up to five points. However, they typically impact your score for the first 12 months they’re on your report.
What Does Hard Inquiry Mean?
Hard inquiry means that you’ve applied for credit through a bank or lender and they have pulled your full credit report to review. These types of credit checks usually require written permission because they give someone access to your full credit history unless they have “permissible purpose” under the FCRA to check your credit.
What’s the Difference Between a Hard Inquiry and Soft Inquiry?
When comparing a hard vs soft inquiry, the main difference is that hard inquiries have a negative impact on your credit score and provide a full view of your credit history. Hard inquiries occur during new credit applications and soft inquiries occur during pre-approval processes, background checks, and when you check your score yourself.
How Many Points Will My Credit Score Increase When a Hard Inquiry Is Removed?
The amount of points your personal credit score will increase depends on your exact credit score. People with good credit scores of 670 or higher typically experience a smaller increase in their score compared to someone with a score below 670. Remember, you can start to earn these points back after two years or after a hard inquiry removal.
The Bottom Line
Hard credit inquiries typically stay on your credit report for two years unless you dispute them, and the creditor removes them from your report. You can expect these types of inquiries to ding your credit score by up to five points. You can also focus on your credit utilization and payment history to improve your score.
When you check your credit score on your own, your credit report won’t be hit with a hard inquiry. Instead, this will count as a soft inquiry, which doesn’t have a negative impact on your credit score. You can check your personal credit score for free through an online credit platform like Nav.