How Long Does A Hard Inquiry Affect Your Credit Score?

How does a hard inquiry impact your credit score and how long does it last?

Whenever you apply for any sort of credit, including a credit card, a personal loan, an auto loan, or a mortgage, the lender will probably pull your credit report and score. This is referred to as a hard inquiry. However, hard inquiries can slightly affect credit scores for a short time. Knowledge of how these types of credit checks operate and the duration they take before being reflected on your scores will help you in managing your credit.

What does it mean for a credit report to be HIT with a Hard Inquiry?

A hard inquiry is made when a potential lender requests your credit report due to a credit application. This enables them to assess your ability to pay your credit obligations, your payment history, the amount of credit that you use, the length of your credit history, and any recent credit inquiries made on your report and score. Hard inquiries can be initiated by banks, credit card companies, auto loan companies, mortgage companies, or any institution that deals in lines of credit or loans.

How Hard Inquiries Affect Your Credit Scores?

While hard inquiries do not have the most severe consequences, they can reduce credit scores by a few points. FICO and VantageScore systems are intended to differentiate those consumers who are seeking new credit lines at the moment and may pose a higher risk from those who are not. For instance, an applicant who has applied for eight credit cards in the last three months might be a riskier client than a client who has only applied for one credit card.

However, this effect is usually quite moderate, and a single inquiry tends to cause the credit score to drop by less than five points. The impact is not that long, especially if one has a long and good credit history in general. A single inquiry will not greatly reduce a perfectly good credit score if everything else is fine.

How Long Does It Take for It to Affect Credit Scores?

In general, hard inquiries can be reported for up to 12 months, although their negative effects in terms of scoring are rather short-lived. Here is a general timeline.

0-1 months: The maximum score impact is when the subject matters relating to the assignment and the student's performance are discussed. The scores decrease by a maximum of about 5 points on each hard inquiry during this initial period, although it is usually less than this amount.
1-6 months: Declining impact. The score impact reduces gradually during this time.
6-12 months: Negligible. Thus, if no further inquiries are obtained, a hard inquiry after 6 months will have a negligible impact on credit scores.
12+ months: This is no longer seen in a credit report. The inquiry can be seen for one year under the Fair Credit Reporting Act then it must be archived. At this point, the inquiry has no effect.

This again may take a varying period depending on the credit score model being used. For instance, while calculating credit scores, VantageScore does not consider inquiries that are older than 6 months. But on average the time limit is one year from the date of inquiring.

Ways Used to Prevent the Effects of Hard Inquiry

If you need to open new credit but want to avoid tanking your scores unnecessarily, consider these tips.

Search for other offers in terms of time and be specific to avoid cases of comparing apples and oranges. When loan applications are spread out over several months, each inquiry is detrimental to the score. However, if you apply for the same type of loan within a short period (for example, within 30 days), multiple inquiries will be counted as a single one rather than each of them negatively affecting your score. So if auto shopping, check with multiple dealers in the same month.
This means that you should allow time between different inquiries that you make to the respondents. However, when engaging in comparison shopping, the inquiries are focused on a single period to reduce effects; inquiries for other new credit such as credit cards should not be made during this period. Space loan types are at least three to six months apart for better outcomes. This means that score impact will decrease between applications rather than build up.
Ask about prequalification. Most lenders let you see your prequalified rates and terms without performing a hard credit check or affecting your credit scores. This makes it easy to determine your chances of being approved without having to go through the entire application process. Pre-qualifying is a good start before formally applying for a loan.
Ensure that you have positive scores between different applications. It is also important to maintain other positive credit behaviors in between credit applications such as paying all bills on time, carrying low credit utilization on credit cards, avoiding having accounts closed or going to collections, and not applying for other credit products. This helps to bring up your scores to offset the credit check decline that comes with each new HWI.

The Takeaway

There will always be a slight movement of a few points downwards on your credit score when lenders pull your credit report while you are shopping for loans or credit cards. A single relatively fresh investigation generally will not bring your ratings down significantly unless your credit record is already subpar. And the effects come down to a stop in roughly six months. Using the tips outlined here, you can apply for the necessary credit and get approved while avoiding a significant drop in your credit score due to the presence of hard inquiries.

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