Also known as a hard credit check, a hard inquiry happens when a lender checks your credit report after you apply for credit. “When you apply for credit, you authorize those lenders to ask or ‘inquire’ for a copy of your credit report from a credit bureau,” credit-scoring company FICO® explains.
This type of credit inquiry does have an impact on your credit scores. According to FICO, a hard inquiry can lower your credit scores—usually by just a few points. The CFPB explains why: Credit-scoring models generally look at how recently—and how often—you’ve applied for credit.
Requesting a credit limit increase may also trigger a hard inquiry, but that can depend on the lender’s policies, how they access your credit and your specific circ*mstances.
How many hard inquiries are too many?
When lenders are evaluating your credit risk, one of the factors that they’ll look at is the number of hard inquiries on your credit report. If you apply for many credit products in a short period of time, lenders may view this as an indication that you may be a greater risk than other borrowers.
While one or two inquiries may not cause a red flag, having several on your credit report could have a negative impact on your ability to qualify for financing or result in higher rates for approved financing.
How long do hard credit checks stay on your credit report?
Hard inquiries may stay on your credit reports for up to two years. However, hard inquiries that are more than a year old might not affect your scores. If you continue to make on-time payments and keep your credit utilization rate low, you should be able to bring your credit back up fairly quickly.
As Equifax®, one of the three major credit bureaus, explains, “Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year.”
FICO confirms that this is how their credit scores work: “Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years.”
