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How Long Do Hard Inquiries Stay On Credit Report

How Long Do Hard Pulls Stay On Your Credit Report

How Long Do Credit Inquiries Stay on Credit Report

Your credit score is an important number that can have a major effect on your life.

Your score is what lenders use to decide whether or not to approve you for credit, including some the most coveted credit cards.

Besides that, your credit score also affects your interest rates. The higher your score, the better the odds of getting a low APR.

  • How much debt you owe
  • Your total credit limit
  • The number of accounts you have
  • The types of credit youre using
  • How long youve been using credit
  • How often you apply for new credit

Each of these factors affects your credit score in different ways. Positive information–like on-time payments–help your score. Negative information, such as late payments, can knock points off.

Hard credit pulls are one of those things that can cause your credit score to be dinged temporarily.

If youre not sure what a credit hard pull is, or just how much it can affect your credit score, we cover everything that you need to know.

How Do Hard Inquiries Affect Your Credit Score

Often, questions about hard inquiries arise when someone checks their credit report after applying for an auto loan or credit card, and they notice that theres been an immediate drop in their credit score.

What many dont realize is that the drop in the credit score isnt necessarily from the hard inquiry but rather from a decrease in the average age of accounts.

Hard inquiries are just one aspect of your overall credit score. Its estimated that this category makes up about 10% of your credit file. The rest of the score comes from the following factors:

How much free credit you have available compared to how much you owe. The lower the number, the better.

Account age New credit accounts are seen as less favorable than aged accounts.

Length of credit history The longer youve been a reputable borrower, the higher the score you can achieve.

Payment history Making on-time payments can boost your score, while being late can cause a drop.

Not all credit is created equal. Credit bureaus are looking for a mix of accounts, including credit cards, mortgages, student loans, retail accounts, and car loans.

If, however, you notice that the inquiries show up as individual items on your credit report, you have grounds for a dispute.

To minimize the impact hard inquiries have on your credit score, follow these tips:

Now that you’re aware of the effect of these inquiries, you’ll be able to take steps to prevent unauthorized credit inquiries in the future.

How Much Will Credit Inquiries Affect My Score

The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores.

For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part are only 10% of what makes up a FICO Score. Much more important factors for your scores are how timely you pay your bills and your overall debt burden as indicated on your credit report.

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Whats A Soft Credit Inquiry

According to the Consumer Financial Protection Bureau , a soft checkâalso known as a soft inquiryâis a review of your credit file and existing accounts. Soft inquiries donât impact your credit scores.

Examples of Soft Credit Inquiries

How Long Does Information Stay On My Equifax Credit Report

Hard Inquiries: How Long do They Stay on Your Credit ...

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Highlights:

  • Most types of negative information generally remain on your Equifax credit report for 6 years

  • Closed accounts that were paid as agreed remain on your Equifax credit report for up to 10 years after they were reported as closed by the lender

  • Hard inquiries may remain on your Equifax credit report for 3 years

When it comes to credit reports, one of the most frequently asked questions is: How long does information stay on my Equifax credit report? The answer is that it depends on the type of information and whether its considered positive or negative.

Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, or a bankruptcy stays on credit reports for approximately six years. Here is a breakdown of some the different types of negative information and how long you can expect the information to be on your Equifax credit report:

Here are some examples of “positive” information and how long it stays on your Equifax credit report:

  • Active accounts paid as agreed. Active credit accounts that are paid as agreed remain on your Equifax credit report as long as the account is open and the lender is reporting it.
  • Closed accounts paid as agreed. If the last status of the account is reported by the lender as paid as agreed, the account would stay on your Equifax credit report for up to 10 years from the date it was reported by the lender as closed to Equifax.

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Lots Of New Inquiries Will Make It Worse

Finally, lets say that youve just opened up a hand full of credit cards over the past few months.

In that case, you would have several back-to-back hard inquiries.

When you get an additional hard pull, youll probably feel the sting of that hard pull much worse than someone else with fewer inquiries.

And it makes sense that this would be the case.

If you are aggressively applying for credit lines there is a good chance that you are in a tough financial position. Credit card enthusiast aside, most people dont go around applying for multiple credit lines when everything is gravy.

Therefore, banks will be more worried about lending to you and that is why the credit score drops.

How Much Does A Hard Inquiry Affect Your Credit Score

How much a hard inquiry affects your credit score depends on the length of your credit history. Hard inquiries have a greater impact on your score if you have a short credit history or just a few credit accounts. 1

Typically, hard inquiries only take a few points off your credit score. In most cases, youll lose a maximum of five points off your FICO score and 510 points off your VantageScore credit score. 23

By comparison, factors like your payment history and have a much larger effect on your credit score. For instance, being 30 days late on a payment can cause your FICO score to drop by over 80 points. 4

Soft inquiries dont hurt your credit score

Hard inquiries can be contrasted with soft inquiries, which dont affect your credit rating and arent visible to prospective lenders. Examples of when you might receive a soft inquiry include when a prospective employer runs a background check on you or a credit card issuer pre-approves you for a card.

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All Credit Inquiries Are Not Created Equal

While credit inquiries only stay on your credit report for a maximum of two yearsâactively impacting your score for no more than 12 monthsâyou should know that the FICO algorithm considers different credit inquiries in different ways.

According to Hay, âDifferent peopleâs scores will be affected differently by a hard pullâsome may not lose any points, while others may lose several for a single new inquiry.â

It all comes down to what your credit history is and the circumstances of your credit inquiry.

Hay says that, âFICO considers the following factors: the purpose of the inquiry, the number of hard inquiries on your account, the number of recent inquiries, the time elapsed since your last credit inquiry, and so on.â

You see, the effect a credit inquiry has on your credit score isnât black and white. It really depends on how FICO regards your credit inquiry.

For instance, say youâve been shopping around to find the best rate on a business loan, auto loan, or student loan. Odds are, youâve undergone a couple of hard credit pulls in order to lay out all your offers on the table.

The FICO algorithm is designed to ignore multiple credit inquiries made within a certain time frame to allow people to shop around for the best ratesâusually 30 days prior to credit scoring. If youâve contacted four different lenders all with the same purpose, your credit report would only indicate one credit inquiry.

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How Long Will Inquiries Stay On My Credit Report?

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Example Letter For Inquiry Removal

Re: Unauthorized Credit Inquiry

To whom it may concern:

This letter is a request for the removal of unauthorized credit inquiries on my credit report. According to my most recent credit reported dated , there are credit inquiries listed that I did not authorize.

Specifically, I would like to dispute the following inquiries and respectfully request that they be removed from my credit report.

Please remove credit inquiries, which are not authorized, from my credit report within the next 30 days. If possible, please forward a copy of my updated credit report once this step is complete.

Thank you for your help in this matter. It is much appreciated.

Sincerely,

Step 5: Send a dispute letter to the appropriate agency. For each unauthorized hard inquiry, youll need to send a hard inquiry removal letter to the credit bureau that has the item on your record. Make sure you send the letter via certified mail with a return receipt request to ensure they receive it.

Heres a quick reference of the credit reporting agencies addresses:

Equifax

Chester, PA 19016800-916-8800

Step 6: Consider sending your dispute letter online. Not only does this method work faster to remove inquiries, but you can also track the dispute process in real-time via the credit reporting agency dashboard. Dont worry theres no technical skill required for this step! As long as you know the basics of using a computer, youll be able to do this easily.

Make Disputes When Needed

The fact is that you can tell a car dealer not to do a credit check on you, but many will do it anyway. Always keep track of your credit pulls and dispute them if necessary. Especially if you are trying to buy a home, know that mortgage lenders are incredibly picky about any hard credit inquiries on your report.

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Hard Queries Vs Soft Queries: Whats The Difference

A credit inquiry occurs when a business runs a credit check in order to consider lending you money or offering you a line of credit. An inquiry can take place with your knowledge such as when a car dealership runs your credit to check your rate, or without your knowledge like when a credit card company checks your score to see if youre eligible for a promotional card.

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Fraudulent Account Inquiries & Credit Applications

How Long Do Hard Inquiries Stay On Your Credit Report ...

Lastly, if youre making payments on time, lowering your credit utilization, and youve cleared up any mistakes and your score is still looking pretty sad, there could be a possibility of fraud on your account. If your personal information has been stolen, scammers may be opening new accounts in your name without your knowledge. These accounts are neglected, often over-utilized and never paid off, which has a terrible impact on your credit score. Plus, each time a new account is opened, youll have a hard inquiry drop your credit score a few more points. However, you will be able to see all open accounts on your detailed credit history report. If youre checking for mistakes every year, which you should be, you most likely already saw some lines of credit that you dont recognize. It is also possible to dispute having too many hard inquiries on your credit report.

Having multiple hard inquiries in a short time could drop your credit score. While credit unions will recognize if you are shopping around for a car, its better to not have too many inquiries in quick succession. If you suspect fraud or dont understand why your score isnt improving, it may be time to consider credit repair services.

For more letter templates and disputing items on your credit report, visit our dispute letter resource center.

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Managing The Impact Of Hard Inquiries On Your Credit

There are three ways to manage the impact of hard inquiries on your credit:

  • Apply for credit only when you need it: The fewer credit accounts you apply for, the fewer hard inquiries youll receive and the fewer points youll lose. Youre also more likely to be approved for a loan if you dont open too many accountsseeking a lot of new credit in a short period of time may be taken as a red flag by potential lenders.
  • Check if youve been pre-approved: If a lender has pre-approved you, it means they think youre a good candidate for a loan or credit card. Formally applying will still trigger a hard inquiry, but if youre pre-approved, your application is more likely to be successful, which may prevent you from needing to apply with other lenders. This will minimize the number of hard inquiries you receive.
  • Monitor your credit: Use a credit monitoring service to regularly check how many hard inquiries are on your credit report. If you already have several inquiries, consider waiting before you apply for a new line of credit.

Takeaway: Lenders set their own standards for how many hard inquiries you can have.

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How Do Hard Inquiries Affect Shopping For Loans

When you’re shopping around for the best rates on a mortgage, auto loan or other large loan, you may apply with several lenders, which will cause a separate hard inquiry from each one to appear on your credit report. But that doesn’t mean your credit score will plummet, as most credit scoring models weigh multiple inquiries for mortgage or auto loans as one inquiry if they are made within a certain time period . In fact, the newest scoring models from FICO® and VantageScore® completely ignore multiple inquiries for mortgage and auto loans within a short period of time. So you can shop for that dream car or home without worrying about your credit scores.

However, multiple hard inquiries for other types of credit, such as credit cards or even personal loans, aren’t treated the same way, and may cause lenders to suspect you’re having financial difficulties. Applying for a credit card, an auto loan, a home equity loan and a personal loan within the span of a month, for instance, could be a signal you’re in need of money or are taking on too much new debt too fast, and pose a risk to lenders that you won’t be able to pay it all back.

If you’re making a major purchase, you shouldn’t necessarily let the fear of hard inquiries stop you from shopping around for the lowest interest rates. However, you should take steps to ensure that hard inquiries don’t negatively affect your credit.

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What To Do If You Dont Recognize An Inquiry On Your Credit Report

Did you know that an estimated 1-in-5 Americans have an error on their credit report that makes them appear riskier to lenders than they actually are?

Its now more important than ever to review your credit report on an annual basis to check for potential discrepancies.

According to Credit sesame Number of inquiries comprises of 10% of your credit score.

But why does this happen? Isnt FICO looking out for us?

The reality is, our credit reporting system is huge. And because of its size, it tends to be less accurate than it could be. The result is what was just mentioned above: millions upon millions of consumers end up with discrepancies on their credit report which should have never been placed there in the first place.

And the worst part is, this can affect your ability to get approved for a loan without you even knowing it .

Jeanne Kelly, a credit expert at Jeannekelly.net, suggests checking your credit at least 3 months before big purchases to give yourself enough time to fix these discrepancies.

So, start first by getting your free credit report.

Once youve done this, skim through to the section called credit inquiries and look it over. Is there anything there you dont notice? Something you for a fact shouldnt be there?

If you do notice something on your credit report that wasnt authorized by you, you have two main options:

  • Contact the creditor yourself to dispute the inquiry.
  • Hire a specialty service to contact the creditor on your behalf.
  • How Long Do Inquiries Stay On Your Credit

    CREDIT INQUIRIES: How Long Do Inquiries Stay On Your Credit Report?

    Most credit reporting is voluntary. For example, credit card issuers arent legally required to share customer information with the credit bureaus. The credit bureaus arent required to include credit card accounts on credit reports, either. Account information is reported and included in credit reports because it helps the companies involved boost their bottom lines.

    Inquiries are different. The credit bureaus are required by law to disclose when they give anyone access to your credit information. According to the Fair Credit Reporting Act , most inquiries must stay on your credit report for at least 12 months. Employment inquiries have to remain on your credit report for 24 months.

    Typically, the credit reporting agencies opt to keep inquiries on your credit reports for two years. Yet FICO only considers hard inquiries that occurred in the last year. Once a hard inquiry is older than a year, it has zero influence on your FICO Score.

    VantageScore once again is more lenient where inquiries are concerned. If a hard inquiry lowers your VantageScore credit score, it will generally rebound in three to four months .

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