Your credit score is affected by a number of factors, and credit inquiries are one of them. If you’ve recently found a hard inquiry on your credit report, you might be wondering why it happened and — if you’re worried about your score — how to get that hard inquiry removed.
But credit inquiries happen for a variety of reasons — and not necessarily bad ones. They make it possible for you to get approved for new loans or credit cards and also to check your own credit score.
The main thing to keep in mind is that not all credit inquiries are the same, and they won’t all negatively affect your credit score. In this article, we’ll go over the different types of inquiries that exist and how you can manage them to protect your credit score.
- The difference between hard and soft inquiries
- Why a hard inquiry affects your credit score
- How much does a hard inquiry affect my score, and when will it go away?
- How to avoid getting too many hard inquiries
- Some words of caution regarding credit repair companies
- How to remove a hard inquiry on your own
- The final word on hard inquiries
The difference between hard and soft inquiries
There are two types of credit inquiries to be aware of: hard inquiries (or hard pulls) and soft inquiries (also called soft pulls). While soft inquiries won’t negatively affect your credit score, a hard inquiry can.
A soft inquiry can occur for a few different reasons, including when you check your own credit score or if a bank is trying to preapprove you for a credit card. A hard inquiry happens when a company (such as an auto loan provider or credit card company) requests a copy of your consumer report from one of the three credit bureaus in order to respond to your credit or loan application.
The key difference between the two types of inquiries is in how they originated. If you applied for a line of credit (and didn’t just check to see if you could be preapproved), then that company will conduct a hard inquiry. If you didn’t apply for something, then the related inquiry will just be a soft inquiry.
So while you don’t need to be concerned that checking your credit score may negatively impact it, you should be aware that applying for a car loan or a new credit card might.
Why a hard inquiry affects your credit score
Hard inquiries happen when you apply for any type of new credit, whether or not you’re ultimately approved for it. This credit can be in the form of a loan, like a mortgage or car loan; a credit card; or even just a credit increase for an existing card. While hard inquiries are a necessary part of being approved for new credit, having too many of them in a short period of time might end up damaging your credit score.
Why? Because banks often see you as a bigger risk if you’ve recently tried to open multiple new lines of credit, which they determine based on your number of recent hard inquiries. The whole reason credit bureaus track hard pulls is to gauge your behavior and your intentions, which they may use to judge whether you know how to manage your money. This makes it easier for the bureaus to know when you’re applying for financing and how frequently.
“If you have a lot of hard inquiries within a short period of time, it indicates that you have requested credit or insurance from a lot of different providers of financial services,” explains Robert L. Föehl, Executive-in-Residence for the Business Law and Ethics department at Ohio University. “Ultimately, this may be an indicator that you are in a less than optimal financial condition.”
How much does a hard inquiry affect my score, and when will it go away?
How long a hard inquiry sticks around on your score and the damage it can do will depend on a few things. To start, having multiple hard inquiries tends to be more damaging for those with relatively short credit histories than for those with longer ones. So if you haven’t been using credit for very long and only have a few accounts open, you may want to avoid making too many hard inquiries all at once.
As far as how much these inquiries can affect your score, the general agreed-upon value is that hard inquiries may lower your credit score by a maximum of five points. However, according to FICO, a single hard inquiry may not even lower your credit score at all, meaning not every hard inquiry results in an automatic drop of five points.
All inquiries, both hard and soft, will stay on your credit report for two years from the date of the inquiry, but hard inquiries will only affect your score for the first year. Even though both types of inquiries stay on your credit report for some time, you don’t need to sweat the soft ones. Föehl says, “While hard inquiries generally impact your credit score and are included in a copy of your consumer report provided to others, soft inquiries do not impact your credit score and are not included.” So even though the soft inquiries might be there, no one is going to see them.
How to avoid getting too many hard inquiries
If all of this has you worried about the next time you need to apply for a credit card or file a loan application, there are two major things you should keep in mind.
1. Financial institutions can't make a hard inquiry without your prior approval
This means you won’t have to worry whether or not a hard inquiry into your credit score is actually happening as a result of a recent application you’ve made — the company you’re applying with will have to gain your permission before conducting its hard inquiry.
2. Credit agencies recognize the importance of being able to “shop around”
To get the best rates on a new loan or credit card, you often need to compare rates, terms, and other features. Because of this, FICO counts similar hard inquiries made within the same 45-day period as only a single inquiry, thereby minimizing the negative effect on your FICO score. Different credit-scoring models may provide different “deduplication windows,” or periods of time that allow you to shop around without damaging your score with multiple hard inquiries. VantageScore, for example, only allows for a 14-day period.
The best way to preserve your credit score when shopping for rates is to file all of your applications at once — and well within the 14- to 45-day buffer period provided by various credit-scoring services. So even if you fill out a dozen auto loan applications, as long as you complete them around the same time, they shouldn’t impact your credit score all that much.
How to remove a hard inquiry from your credit score
The thing about removing hard inquiries is that you can’t just do it because you want to. Legitimate inquiries can’t be removed by you or anyone else — not even a credit repair company. The only inquiries that can be removed are inaccurate ones. If after viewing your credit report you think a hard inquiry is inaccurate, you have a few options to remove it, including
- Working with a credit repair company
- Doing the work yourself
- Waiting for it to go away (which it will in two years).
Some words of caution regarding credit repair companies
Working with a credit repair company might save you time, but it’s also a lot of money to pay for something you can do yourself.
You should also be aware that there are fraudulent companies that claim they can remove any and all inquiries from your account. By law, a legitimate credit repair company isn’t allowed to do this or even make these claims.
“Consumer reporting agencies strive for maximum accuracy when it comes to your consumer report. The law requires that they do so,” explains Föehl. “They are unlikely to remove a legitimate hard inquiry because removing it would make your consumer report less accurate. As such, hiring a credit repair company to remove a legitimate hard inquiry from your consumer report is not a wise investment.”
Ultimately, the decision to work with a credit repair agency is a trade-off between time and money. If you can afford the hundreds or even thousands of dollars it may cost to work with a credit repair agency and you feel confident the company can save you time by disputing inaccurate inquiries for you — then doing so might be worth it. Otherwise, you should probably just consider doing this yourself.
How to remove a hard inquiry on your own
To remove a hard inquiry yourself, you’ll want to directly contact the credit bureau(s) showing the inaccurate inquiries. The good news is that the days of using certified mail for this are behind us, since all three credit bureaus (Equifax, Experian, and TransUnion) accept disputes online, with Equifax and Experian exclusively accepting them online. If you really want to write a letter by hand to TransUnion, you can, but your stamps are probably better saved for other things.
To get the inaccurate dispute removed as quickly as possible, FICO advises contacting both the credit bureau and the organization that provided the information, since both are required by law to correct the mistake.
Here are some steps to follow when writing out your dispute letter to credit bureaus and organizations:
- Start by stating what you believe is inaccurate, and itemize these errors if there’s more than one.
- Use a dispute template to craft your letter.
- Remember to enclose a copy of your credit report, highlighting the errors on it that correspond with items in your letter.
- Request the deletion or correction of the information.
- Last but not least, keep a copy of everything you send for your own records.
You can expect to hear back from the credit reporting agencies within 30 days. If your request doesn’t end favorably (which sometimes happens) but you still think you have a legitimate claim, you can ask the credit bureau to include the statement of your dispute in future credit reports. This will inform future lenders that you went to the trouble of contesting false information and that you believe the hard inquiries on your score to be inaccurate.
What should you do if you don't recognize a hard inquiry on your credit report?
If you do not recognize a hard inquiry on your credit report, check the information carefully, including the date of the inquiry.
Sometimes, hard inquiries show up under a different name than you know the creditor by. For example, if you request financing at a car dealership, it may show up under the name of the dealer's preferred lender rather than the dealership's name. You might also get several hard inquiries if you are interest rate shopping and obtain multiple quotes from different lenders.
If you have not applied for new credit at all or the inquiry is not from a company you have done business with that's operating under another name, it's possible the hard inquiry could be a sign of identity theft. Here, you could contact the creditor that posted the inquiry to find out more details, review your credit report for other signs of identity theft, and consider placing a credit freeze or fraud alert on your credit accounts.
Can you dispute hard inquiries online?
It is possible to dispute a hard inquiry online if the hard inquiry is not legitimate. If you did not make a request for credit, you can choose to contact each of the three major credit bureaus (Equifax, Experian, and TransUnion) to start the dispute process for unauthorized hard inquiries or negative items.
When can you expect to see a hard inquiry on your credit report?
When you submit a credit application or apply for a loan pre-approval, credit card issuers or other lenders will typically perform a hard credit inquiry. Once a card issuer or lender has made a request for your credit information, the hard inquiry could show up on your report and remain there for two years.
The final word on hard inquiries
Clearing up inaccurate hard inquiries can be time-consuming but might be worth it if removing them significantly improves your credit score. Keep in mind that credit inquiries (accurate or not) aren’t the only things that affect your credit score and, in some cases, don’t even have a majority ruling.
For example, if you take a look at how FICO determines credit scores, you’ll see that other factors, like credit utilization and payment history, have much more sway over your score than a few points lost to a hard inquiry.
All of which is to say that you’ll want to check your credit score often — not just for hard inquiries. If it seems low or wrong to you, take the time to find out why by requesting a free credit report and pinpointing exactly what you need to improve.
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