What is a hard inquiry? Does it hurt my credit score?
There are 2 types of Inquiries that you may see on your Credit Report. One type of inquiry is called a hard inquiry and the other is a soft inquiry.
A hard inquiry is a credit check that is made by a company who pulls your credit report after you submit an application with said company, which could be for a mortgage, auto loan or even an Apartment rental. This is different from a soft inquiry, which is usually done by companies who send out promotional mail for ‘pre-approved’ applications.
Hard inquiries are the only inquiry that will affect your credit score, usually by less than 5 points or so. These inquiries will also stay on your credit report for up to 2 years, which can cause your score to go down for over a year (by a few points or so).
Why do hard inquiries matter to your credit?
- Too many hard inquiries in a short period of time could cause red flags to lenders. This could show that you’re suddenly looking to borrow a lot of money, or that other lenders are not approving you (if there are no matching accounts) for some other reason. Be careful to not apply for too many accounts in a short period of time, especially if your credit score is already low.
- Hard inquiries will cause your credit score to decrease for at least one year. If you try to apply for 4-5 credit cards at once, you could see your score take quite a hit, and it’s possible that it may not recover for up to a year. These inquiries also stay on for 2 years.
Be careful when filling out applications. Do you really need that account? Are you truly qualified to get that loan/card? If not, don’t try it. Your score will only go down from there.