How Hard Inquiries Impact Your Credit Score
Believe it or not, hard inquiries can and usually do impact your credit score. Admittedly, this impact isnt as major as other credit factors. According to the popular credit model FICO, hard inquiries only account for 10% of your total score.
Plus, the effect on your credit score upon a hard pull is minimal. In most cases, recent hard inquiries will only drop your credit score a few points. Inquiries from over a year typically wont impact your credit score at all.Hard inquiries also have a tendency to have a greater impact on consumers who have a less established credit history. This means that if you are in the beginning phases of building your credit, 3 to 4 recent inquiries are going to cost you more points than someone with years of established credit.FICO also says that a single inquiry will temporarily drop the average credit-established consumers score by five points or less. Dont let the illusion of minimal credit damage fool you though. Masses of inquiries in a short time window can be slightly credit-damaging as well as have other consequences if you arent careful.
What Is The Difference Between A Hard And Soft Inquiry
When you review your credit reports after applying for a loan, credit card or other form of credit, you’ll likely see the hard inquiry it caused, but you also may see other inquiries, called soft inquiries.
Soft inquiries are often the result of you checking your own credit report, a preapproved offer of credit, or a periodic account review by a company you already do business withbut those aren’t the only events that can cause them. They differ from hard inquiries because they don’t generally reflect an application you’ve submitted for credit, and could even be the result of something like the IRS verifying your identity for your tax refund, for instance. Soft inquiries do not affect your credit scores.
How To Check For Hard Pulls On Your Credit File
Start by getting a copy of your credit report from annualcreditreport.com. Each year youre entitled to a free credit report from each of the three bureaus.
Once you have your report on the screen, find the section for credit inquiries. Its possible you may have forgotten about a loan application you or your spouse originated in the past few months.
Its also possible a credit card company or car dealership checked your credit using a business name you dont recognize at first.
Just Google the name of the lender to see if its connected to an inquiry you remember. Find a phone number and give the company a call to confirm you applied for a loan.
If you remember the credit check, it was probably a legitimate hard inquiry and youll just need to wait a couple years for it to go away.
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How Long Does Something Stay On Your Credit Report
Negative information can stay on your credit report for 7 to 10 years, depending on the type of information. Positive information can stay on your credit report for 10 years after a loan or credit account is closed, or indefinitely if the account is still open.
Knowing how long negative information such as late payments, delinquent or defaulted accounts, and other unfulfilled financial obligations will stay on your credit report is particularly important because such records can do a lot of damage to your credit score and your finances overall. The following table will get you started with a general sense of the shelf life for different types of credit report information.
Exact Answer: 2 Years
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Banks offer so much more than safety lockers for money. They provide loans of all sorts to help people out at their times of need, money can be credited, debited, and transferred when one wants to easily without any trouble. Even internet banking is available nowadays, a hassle-free method to pay taxes and bills. These methods are trustable and one of the most advantageous things about banks is that they also offer credit cards when a person and their bank accounts meet certain criteria.
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How Long Does Information Stay On My Equifax Credit Report
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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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What To Know About Rate Shopping
Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping.
In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14-day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45-day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.
How Soft Inquiries Impact Your Credit Score
Soft credit inquiries have no impact on your credit score. Though soft inquiries might appear on a special section of your credit report, they are not recorded by either FICO or VantageScore, which means they cannot affect your credit score.
The reason soft inquiries are not tracked by FICO or VantageScore is because soft inquiries are not directly related to a credit application. A lender might conduct a soft credit inquiry as part of a credit pre-approval, but thats not the same thing as completing the credit application process. If you decide to apply for a credit card after receiving a pre-approval offer, the lender will do a hard credit pull before deciding whether to formally accept you for the card.
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How Do Hard Pulls Affect Your Credit
Hard pulls show up as an inquiry on your credit report. These inquiries are reflected in the “new credit” factor of your credit score, which makes up 10% of your score.
FICO scores, developed by the Fair Isaac Corporation, are the scores most lenders use when making approval decisions. Altogether, the average person can have more than four dozen FICO scores.
Along with hard inquiries, your FICO score is calculated using these factors:
Negative Information From Public Records
Tax liens have been removed from all credit reports, as of April 2018. Before that, unpaid tax liens remained on credit reports indefinitely. Paid tax liens remained for 7 years from the date of payment .
Civil judgements no longer appear on credit reports, either. Before the law changed, records of judgements remained on credit reports for 7 years from the date filed in court. This was regardless of whether the amount owed was paid.
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Exceptions To The Credit Impact From Hard Inquiries
Like we mentioned earlier, lenders do not like to see multiple inquiries to various creditors in a short time span. However, there is an exception to the standard hard inquiry rules when it comes to loan or rate shopping. And fortunately, modern credit models are intuitive enough to differentiate the difference in shopping vs. genuine inquiries.
Multiple inquiries occurring in a set time frame may only be grouped into one inquiry. This is especially true on certain types of accounts such as mortgage loans, auto loans, and utilities.
If you are in the home buying market and are checking with various mortgage lenders, the many inquiries can be considered loan shopping. So long as the inquiries are within a certain time frame, typically 14 45 days, you are only dinged for one inquiry.
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Hire A Credit Repair Service
Disputing errors can be a time-consuming process, especially if your history has several mistakes or if you were a victim of identity theft. Reputable credit repair companies such as , Lexington Law or Sky Blue may be viable solutions if your file is riddled with inaccuracies.
Credit repair services can help you dispute inaccurate negative information and handle creditor negotiations. However, if you decide to hire a credit repair agency, bear in mind that there are consumer protection laws regulating how they operate and what they can do. The establishes the following regarding credit repair services:
- They cannot provide false or misleading information concerning a persons credit status and identification
- They must provide a detailed description of the services they provide
- They cannot charge for their services until they has been completed
- There must be a written contract detailing the services theyll provide, the time frame in which these services will be provided and the total cost for them
- They cannot promise to remove truthful information from your record before the term set by law
- You have three days in which to review the contract and cancel without penalty
Before signing up with one of these companies, its important to understand what they can and cannot do. For example, any company that promises to remove accurate negative items or create a new credit identity for you is most likely engaging in illegal practices or a scam.
Hard Inquiries And Your Credit Score
Hard credit pulls are listed on your credit report. Each pull affects the new inquiries part of your score calculation. So how damaging are they?
The impact of a single inquiry typically isnt that serious. Each new inquiry can shave 2 to 5 off your score.
If you apply for one new credit card or line of credit each year, you may not see a noticeable difference in your score. Generally, your score will rebound within 6 to 12 months.
Multiple inquiries, on the other hand, can wreak havoc with your score, especially if theyre grouped close together.
If you apply for four or five credit cards all at once, you could lose 20 points or more off your score. That could push you out of good credit range and into fair, or even poor, credit territory.
Even if your score doesnt suffer dramatically, you still want to avoid going overboard with credit applications. It sends the signal to lenders that youre desperate, which could lead to denials if you come off as more of a credit risk.
Tip: Theres an exception to the inquiry rule if youre shopping around for a mortgage, car loan, or private student loan. Generally, if the inquiries are within a 14- to 30-day time frame, theyre treated as a single inquiry for scoring purposes.
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Hard Inquiries Could Be The Least Of Your Worries
Quite honestly, you shouldnt worry too much about hard inquiries. Unlike other entries on your credit report they remain for two years rather than seven years.
Also, they can hurt your credit score for up to 12 months.
That said, if you have other negative items on your credit report such as collection agency accounts, charge offs, or late payments, I would recommend getting these removed from your credit report.
You can either do this yourself or hire a professional to remove the negative items.
If youd like a professional credit repair company to help you get the best rates on future loans, I suggest you check out Lexington Law Credit Repair.
Theyll take care of you. Give them a call at 1-844-764-9809 or Check out their website.
How Many Hard Inquiries Is Too Many
The effect of a hard inquiry on your credit scores ultimately depends on your overall credit health. In general, adding one or two hard inquiries to your credit reports could lower your scores by a few points, but its unlikely to have a significant impact.
Having a lot of hard inquiries within a short time frame though will likely have a greater impact on your scores. This is because lenders and in effect, credit-scoring models look at multiple credit applications in a short amount of time as a sign of risk. Though there can be exceptions when youre shopping for specific types of loans, like car loans, student loans or mortgages.
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Negative Information From Credit Inquiries
Both hard and soft credit inquiries stay on your credit report for two years. Only hard inquiries can affect your credit score, and the impact lasts for one year.
With that being said, on your credit report are more informational than anything else. As long as you avoid making multiple inquiries at once, your credit score should only drop by about 5-10 points. If youre interested in learning more, we have a page specifically about how long inquiries stay on your credit report.
How Long Does A Credit Check Take
Nowadays, most lending institutions have automatic systems to run credit checks for them. These systems can finish a check in less than five seconds. Of course, if you want to conduct a credit check on yourself, it will take a bit longer. First, youll need to request your report at annualcreditreport.com by entering your name, address, social security number, and date of birth in an online form. Once you take care of that, you should be able to access your report right away.
Third parties that are checking your credit without the help of an automatic system – e.g., landlords – may have to wait 2 to 10 days to get your reports.
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What Should You Do If There Is A Hard Inquiry On Your Credit Report That Does Not Belong To You
If you check your credit report and find a hard inquiry that does not belong to you, you have two options to have the inquiry removed. The first option is to file a dispute with the credit reporting bureau displaying the inquiry and ask them to remove it. Once youve filed a dispute, the credit reporting bureau will conduct an investigation to determine whether the inquiry belongs to you. If they find that it does not, it will be removed from your credit report.
The second option you have is to use the contact information of the person or entity that placed the hard inquiry on your credit report to contact them and explain to them that you did not apply for the credit card or loan that they claim you applied for. Some creditors and lenders are willing to remove a hard inquiry if you are not the application.
However, in the event that theyre not willing to remove the hard inquiry, dispute it through the credit reporting bureau reporting the hard inquiry.