What Are Credit Inquiries and How Do They Impact Your Credit?

Your credit reports can contain a lot of information, including a list of every time the credit report was checked in the last two years. These records are called credit inquiries, and they're split into two groups—hard inquiries and soft inquiries.

Inquiries can be important because hard inquiries might hurt your credit scores. However, once you know how inquiries work and when they affect your credit scores, you can strategically apply for new credit cards and loans to limit their impact.

What Are Credit Inquiries?

A credit inquiry is a record of when you or someone else receives a copy of your credit report.¹

You may have three credit reports, one from each of the major credit bureaus—Equifax®, Experian™ and TransUnion®. And an inquiry only gets added to the requested report, which is one reason your credit reports are often different.

New credit inquiries can happen for many reasons. For example, if you check your own credit report, that can lead to a credit inquiry. Or, if you apply for a new credit card, the credit card issuer may review your credit report and a credit score based on the report before it makes a decision.

What Leads to Hard Credit Inquiries?

A hard credit inquiry, sometimes called a hard credit pull or hard credit check, happens when someone requests your credit report before making a lending decision. You initiate these credit checks by applying for credit, and creditors get your permission before asking the credit bureau for your credit report.²

Hard credit inquiries could be added to your credit report after you:

• Apply for a loan
• Apply for a credit card
• Apply for a personal line of credit

Requests for an extension of credit rather than a new credit account also might lead to a hard inquiry, such as when you ask a credit card issuer to increase your card's credit limit. But it depends on the card issuer's policies.³

What Leads to Soft Credit Inquiries?

Soft credit inquiries are the result of credit checks for non-lending purposes.¹ For example, this can happen when:

• You check your own credit reports
• Your current lender monitors your credit
• You receive a prescreened credit offer
• An insurance company checks your credit report
• An employer runs a background check

Soft inquiries can happen without your permission. However, they never affect your credit scores and organizations need to go through a review process and have a legally defined permissible purpose to receive your credit report.⁴

How Can Credit Inquiries Affect Your Credit?

Only hard inquiries can affect your credit scores, and they're often a minor factor. But the exact impact will depend on your overall credit file and the type of credit score.

When a company requests a copy of your credit report from a credit bureau, it can also request a credit score based on the report. There are many types of credit scores, and they may treat hard inquiries differently.

For example, FICO® and VantageScore®, the companies that create widely used credit scores, have slightly different rules for when to consider or ignore new hard inquiries.

How FICO Treats Hard Inquiries

FICO has three rules that affect when and if hard inquiries will hurt your FICO credit scores.⁵

• One-year window: Only consider hard inquiries from the last 12 months.
• 30-day buffer: Ignore hard inquiries from auto, student and mortgage loan applications from the last 30 days.
• 45-day deduplication period: Treat multiple hard inquiries from auto, student and mortgage loans as one hard inquiry. The most recent FICO Score versions use a 45-day “dedupe" period, but some older versions use a 14-day period.

FICO Score's deduplication is specific to the type of inquiry. For example, if you're shopping for auto loans and get 10 offers, FICO Scores will treat them all as one inquiry for scoring purposes. If you shop for student loans the next week, that will still count as a second hard inquiry.

How VantageScore Treats Hard Inquiries

VantageScore's credit scores have two rules affecting hard inquiries.⁶

• Two-year window: Consider hard inquiries from the last 24 months.
• 14-day dedupe period: Dedupe various types of hard inquiries within a 14-day window. If you apply for a credit card, auto loan and personal loan during the same week, VantageScore credit scores only count them as one hard inquiry.

Unlike FICO, VantageScore doesn't use a buffer to ignore recent hard inquiries.

How to Shop for Credit Without Hurting Your Credit Scores

You often don't know which type of credit score a lender will use when reviewing your application, but you can still use the rules above to strategically shop for credit.

For example, if you're looking for a new auto loan, you could try to submit all your applications within a 14-day period. That way, all the hard inquiries will only count as one hard inquiry regardless of the type of credit score.

You can also see if the lender offers pre-approvals or prequalifications. For example, you can see if you prequalify for the CareCredit credit card, which won't affect your credit score.

If you're prequalified, accepting and applying for the offer can still lead to a hard inquiry. But you can apply with confidence that your application will likely be approved.

Frequently Asked Questions About Credit Inquiries

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Author Bio

Louis DeNicola is a freelance writer who specializes in consumer credit, finances and fraud. He has several credit-related certifications and works with many lenders, publishers, credit bureaus, Fortune 500s and FinTech startups. Outside of work, you can often find Louis at his local climbing gym or cooking up a storm in the kitchen.