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Does Running Your Credit Lower Your Score

Old Scoring Vs New Scoring

Car Loan Shopping: Does Running Your Credit Report Hurt, Lower, or Affect Your Credit FICO score?

Actually, it kind of depends. FICO has changed the way it deals with rate shopping recently. Since potential lenders can still get copies of your credit score based on older scoring models, its important to understand how rate shopping works under both the old and new methods.

  • Both old and new models ignore inquiries made in the previous 30 days. Say you apply for a mortgage with Company A on the 1st and Company B on the 15th. The inquiry with Company A wont show up on your credit report, muddying the waters when Company B pulls your score.
  • Older FICO scoring models give you 14 days to rate shop. This means that any applications for the same type of credit made within a 14-day period will be treated as a single hard inquiry.
  • Newer FICO scoring models give you 45 days to rate shop. Now, youve got a much longer time period for shopping before your inquiries are lumped together here.

The problem is that you cant actually choose which scoring model your potential lender will use. If you rate shop over a 30-day period but they pull an older FICO score, they may see multiple hard inquiries. Again, inquiries arent a huge factor in your score. So, this is likely not a big deal.

But if you want to keep your score as high as possible, rate shopping over a two-week period is the best bet.

Checking Your Own Credit Score Wont Lower It But Other Credit Checks Might Have An Effect On Your Score

Ever wonder if checking your own credit scores will lower them? Great question! The short answer is noâchecking your credit scores yourself wonât hurt them. However, other types of credit checks could cause your scores to dropâthough the drop could just be temporary and only by a few points.

Read on to learn more about the two kinds of credit checksâsoft checks and hard checksâand how only hard checks can lower your scores.

What Is A Credit Inquiry

Anytime someone checks your credit report including yourself, lenders, banks or even landlords, its recorded on your report as a soft or hard credit inquiry.

Each of the three credit bureausEquifax, Experian and TransUnionkeep track of the inquiries on your report because it can say a lot about the risk you pose to lenders. While lenders arent too worried about soft inquiries because it doesnt impact your credit score, they do take caution around hard inquiries. In the lenders eye, multiple hard inquiries can indicate youre taking on more credit than you may be able to afford.

For example, according to FICO, People with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy.

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What Can Lower Your Credit Score

While checking your own credit score won’t change it, there are plenty of other things that can affect your credit score negatively. Here’s a quick breakdown of each factor that influences your FICO® Score:

Because there are so many variables that go into calculating your credit score, it’s impossible to determine exactly how much damage a negative item may cause to your score. But if you notice your credit score drop and are wondering why, look at these areas to find the likely reason.

Hard Vs Soft Inquiries

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A credit inquiry shows up whenever your credit report is accessed. That means applying for a loan or a new credit card will generate an inquiry record on your report.

Watch on

Lenders make credit inquiries to check your history of making payments on time and your general credit-worthiness, but theyre not the only ones checking your credit report. Other parties, such as potential landlords, may also use your credit report to get an idea of your financial responsibility.

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Too Many Requests For New Lines Of Credit

As mentioned above, your FICO score does not take into consideration any consumer-initiated or promotional inquires into your credit record. That means you can check your own credit score without risk of damaging it and that companies that make inquiries before sending you promotional notices will not affect your score, either. The 10% of your FICO score that is based on new credit includes the number of recently opened accounts , the number of recent credit inquiries , and how long it’s been since new accounts were opened or credit inquiries were made.

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The Only Time Your Credit Score Could Drop As A Result Of A Credit Check Is When You Apply For New Credit

Examples include applying for any type of loan, such as a mortgage, auto loan, auto lease, a new credit card, or an increased credit line with an existing card or loan.

These are the only instances when a credit check will lower your credit score, as new credit or inquiries for new credit pose new risks, regardless of how great of a borrower youve proven to be in the past.

In the eyes of creditors, consumers who are actively seeking new credit pose a greater risk of default, whether that materializes or not.

Of course, the stronger your credit profile, the less impact these, dare I say, harmful credit checks will have on your credit score.

As a rule of thumb, the more hard credit inquiries you have in a short period of time, the more your score will drop, so exercise moderation.

How Long Do Inquiries Stay On Credit Reports

Key Credit Repair: Does Running Your Credit Hurt Your FICO Score?
  • While these types of questions are constantly being disputed
  • We know that inquiries only remain on credit reports for 2 years
  • And FICO just factors them into scoring for the past 12 months
  • So theyre only meaningful for a short period of time and typically dont have a strong effect on scores anyway

A reader once asked me, Do credit inquiries ever go away? Although there seems to be much dispute about this, credit inquiries only remain on your credit report for two years.

Additionally, FICO scores only factor in inquiries as part of their scoring methodology for the previous 12 months.

In other words, even if they are present on your credit report, theyre only meaningful from a credit-scoring perspective for a single year.

The rest of that 24-month period they just serve as additional information to you and your creditors.

Additionally, Fair Isaac, the founder of the FICO score, has improved its scoring model to distinguish rate shopping versus a consumer attempting to open a large number of different accounts.

The latter borrower would probably see their credit score drop because a series of new credit accounts tends to lead to greater credit risk.

But a consumer with multiple inquiries related to the same type of loan within a 14-45 day shopping period will generally see no adverse effect to their credit score, as only one inquiry should be counted against them.

For example, think of a person who shops with multiple lenders to obtain a home loan.

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New Credit Applications What To Watch For

New Credit one of the categories that make up your score is where hard inquiries come into play. Note that this portion of your score only amounts to around 10 percent of the total scoring, but is still an important factor.

Still, new credit applications are worth your attention. If you have a short credit history, you should be careful not to open too many new accounts too fast. Slow and steady wins the race.

However, if you have a long and established credit history, your FICO® Score may be affected differently. It doesnt mean that a hard inquiry cant affect your score, but there are other factors in play. Since you have already established your Payment History and Length of Credit History, opening new accounts might change your credit utilization ratio. How?

Say you owe $2,000 across three credit cards with a total credit line of $8,000. Thats a 25 percent utilization ratio. If you get approved for two new credit cards with a $2,000 line each, your total credit will increase to $12,000, and your utilization ratio will decrease to 17 percent. While it may sound like a good idea, just remember that responsible spending under these credit limits is important for overall credit health.

Do Apartment Credit Checks Lower Your Score

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Most apartment complexes require applicants to agree to a credit check as part of the application process. If you decline to allow a landlord or property manager to run a credit check, chances are your rental application won’t be approved. An apartment credit check is considered a “hard” inquiry and having many becomes a red flag to future lenders or landlords. While you might only be applying to different complexes, a lender may later view your score as a sign that you are financially overextended.


Although a credit check is often a necessary step in qualifying for an apartment rental, its impact on your score doesn’t have to be detrimental. Limiting the number of applications you submit can minimize the impact on your credit score.

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How Credit Inquiries Can Hurt Your Credit Score

  • A single hard inquiry may lower your credit score by 5 points or less
  • But the effect will vary based on the strength of your overall credit profile
  • A large number of inquiries in a short period for different purposes can be more harmful
  • And even if your credit score is high you could be denied new credit on their presence alone

As alluded to above, a credit inquiry can lower your credit score, but the impact is generally rather inconsequential.

Typically, a single credit inquiry will take less than five points off your credit score, but this can range depending upon the type of inquiry and the overall makeup of your .

If you have a limited credit history, one inquiry will have a greater impact than a consumer with a solid 10-year credit profile.

But a large number of different types of inquiries in a short time period can be a red flag for potential creditors, and could result in a noticeably lower credit score.

And even if you do have a good credit score, a large number of inquires in a short time span could cause a creditor to decline your application for fear that youre getting in over your head.

That said, dont fret too much about pulling your own credit report every now and then as not all credit inquiries count against you.

If you order a credit report online from any of those free credit report sites it wont be factored into your score because its not an application for credit.

Its simply a check-up, and doesnt signal a greater credit risk for the consumer.

Hard Credit Inquiries Dont Hurt Much

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Heres the good news: For many people, the damage from hard checks is minor, usually less than five points off your credit score. One or two credit checks will not significantly harm your credit.

Dont let concern about credit checks keep you from shopping around for the best deal on auto loans, student loans or mortgages. Hard credit checks that occur for specific items like these, and that happen within a certain time frameFICO calls them shopping periodsare usually treated as a single inquiry. While each lender may use a different formula to calculate a shopping period, its typically 1445 days.

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When To Be Cautious

New lines of credit represent only 10 percent of your credit score, according to, but that doesnt mean you should rack up hard inquiries without giving it a second thought.

  • Although credit checks are factored into your credit score for only 12 months, they remain on your credit report for two years.
  • Credit checks can have a greater impact for someone with a short credit history and few accounts, compared with someone who has a long history and wide range of credit experience.
  • To a lender reviewing your credit report, many hard credit checks in a short time may indicate higher credit risk because it could appear that you are trying to get a lot of credit quickly.
  • Drops in your credit score can result in higher interest rates when you borrow, which means you pay more over the life of a loan.

More Accounts Can Lower Your Utilization

Although you might have a higher credit utilization ratio on your new card, your overall utilization rate will go down if you don’t use your cards more than you have been. Since your overall utilization rate is one of the major factors that affects your score, this could bring down your score after a while.

Don’t purchase more on credit simply because you have more cards. It’s important to charge only what you can afford to pay offand to keep your utilization rate low.

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How Does Applying For New Credit Affect My Credit Score

When you submit a new credit application, whether it’s for a or loan, there may be some affect to your credit score if the lender does a hard inquiry into your credit history.

Most credit applications result in a hard inquiry, which means the lender pulls your credit report from one of the main three , Experian, Equifax or TransUnion. Hard inquiries can cause your credit score to fluctuate slightly, compared to a soft inquiry, which doesn’t pull your credit and has no effect on your score.

“Not all inquiries will have a measurable impact on your scores,” John Ulzheimer, formerly of FICO and Equifax, tells CNBC Select. “But, if an inquiry is causing a score to be lower it’s no more than a few points.”

If your credit score drops a few points, you may wonder how quickly you can expect it to rebound. Thankfully, “score changes due to inquiries are usually minimal and scores recover quickly,” Griffin says.

When I recently applied for the Chase Sapphire Reserve®, my score dropped 5 points the day after I applied and rebounded soon after. In a little over a month, my credit score increased a total of 19 points . Take note, I was approved for a generous credit limit and paid off balances on a 0% APR card, which could be part of the reason my score increased.

“Having said that, too many inquiries within a short period of time may be seen as a sign of financial stress and can therefore negatively impact your credit,” Griffin says.

Does Checking Your Credit Hurt Your Score

My Credit Score Is Low, What Should I Do?

First, its important to understand the two ways that someone can look at your credit report. The first is when youve applied for a mortgage, car loan, credit card or other form of credit, and your lender wants to see your credit report to determine if youre a good credit risk. This appears on your report as a hard inquiry and it does affect your credit score, though only by a handful of points.

However, sometimes you havent made an application for credit with anyone, but a credit issuer wants to look at your credit report to consider you for a preapproved or promotional offer. This still appears on your report, but its known as a soft inquiry, and these soft inquiries dont affect your credit score at all.

The good news is when you check your own credit score, youre almost always making a soft inquiry, which means you can check your credit and see where you stand without causing unnecessary damage.

So, if your goal is to take a peek at your credit score without causing any harm, there are quite a few strategies that let you do exactly that. Plenty of credit cards including ones you may already have offer a free credit score as a card holder perk. This includes cards from American Express, Chase, Capital One, Citibank and others.

is another option. With CreditWise, you can see your VantageScore 3.0, provided by TransUnion, without having a Capital One credit card. You can also sign up for alerts that let you know how your credit score changes over time.

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What Is A Hard Credit Inquiry

A hard credit inquiry typically takes place when you apply for a credit card, mortgage, or car loan.

The credit bureaus track much of your financial activity, including:

Credit card balances

Loan balances

History of payments for revolving credit and installment loans

Number and type of credit accounts

Bankruptcy and other public record filings if they meet the minimum standards for reporting

The Fair Credit Reporting Act dictates that a person or organization must have a permissible purpose to access your reports. But federal law and some state laws allow quite a few parties to pull your credit if you have a current or potential relationship with them, Nolo says.

These entities can legally request your credit reports, according to the Fair Credit Reporting Act:


Insurance companies

Entities that have a court order

All hard inquiries will show up on your credit reports, and each hard pull outside the scope of rate shopping for a single loan may lower your credit score a tadby less than five points, according to FICO® . FICO and VantageScore are the two most common scoring models used to convert credit report information into credit scores, ranging from 300 to 850 points.

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Multiple inquiries from auto, mortgage, or private student loan lenders within a short period of time are typically treated as a single inquiry. For FICO, its a 45-day window for VantageScore, its 14 days.


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