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News: What Is A Hard Credit Inquiry? - Credit-Land.com

When you apply for a loan or for a credit card, a lender requests your credit report to assess the risk that you pose as a borrower. Such a request is usually called a hard inquiry or hard pull. Hard inquiries are recorded on your credit report and will remain there for about two years. While hard inquiries can lower your credit score for, typically, less than five points, they usually stop affecting your score in less than a year.

Some consumers believe that checking your own credit reports may affect your credit score. However, that's not true. When you request a copy of your credit reports or even pre-qualify for a credit, this does not result in a hard pull, but rather a soft pull, which does not affect your credit score. In fact, when you check your credit reports regularly, it helps you monitor your accounts.

Here are the most common scenarios in which you can expect a hard inquiry:

  • When you apply for a credit card: each credit card application will result in a hard inquiry.
  • When you purchase or lease a car: getting a loan from a bank or dealership to buy a car, or leasing your car, can result in a hard inquiry.
  • When you buy a house: when you apply for a mortgage, a lender will perform a hard pull on your credit.
  • When you apply for a personal loan: formally applying for a loan will result in a hard credit pull.
  • When you rent or lease apartment: this will either be a hard pull or soft pull. To know for sure, check with the landlord or leasing company.

While soft pulls do not lower your credit scores, hard inquiries can impact your scores, though usually minimally and for a short period of time. Each hard inquiry can cause a slight drop in your credit score, typically no more than five points.

Also, different hard inquiries may be viewed differently. Thus, when you apply for multiple credit cards, each inquiry will be recorded on your credit reports. However, when you are rate shopping for a loan such as a mortgage or a car loan, multiple inquiries within up to 45 days for the same purpose are counted as one inquiry by credit scoring companies.

Hard inquiries will remain on your reports for two years, however, the longer they stay, the less impact they will have. To minimize credit inquiries, use pre-qualification tools, limit new credit card applications, use the rate shopping window, and monitor your credit.

tags : Credit Score Finance Credit Report

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