Jun 18, 2024
Travis Palmer

Understanding Hard Inquiries and Their Impact on Your Credit

Hard inquiries, also known as hard pulls, occur when a financial institution checks your credit report as part of the lending decision process. While they are a common part of applying for credit, they can impact your credit score. This comprehensive guide explains what hard inquiries are, how they affect your credit, and best practices for managing them.

1. What Are Hard Inquiries?


A hard inquiry happens when a lender or creditor checks your credit report to evaluate your creditworthiness. This typically occurs when you apply for credit, such as a loan, credit card, or mortgage.

Types of Inquiries:

  • Hard Inquiry: Initiated by your application for credit and can affect your credit score.
  • Soft Inquiry: Conducted by you or a company for a background check and does not impact your credit score.

Examples of Hard Inquiries:

  • Applying for a mortgage or auto loan
  • Applying for a credit card
  • Applying for a personal loan
  • Apartment rental applications
  • Applying for certain jobs

2. How Hard Inquiries Impact Your Credit Score

Immediate Impact:

Hard inquiries can cause a slight, temporary drop in your credit score, typically by a few points.

Duration of Impact:

  • Short-Term: The impact is usually minor and temporary, often lasting a few months.
  • Long-Term: Hard inquiries remain on your credit report for two years but their impact diminishes over time.

Multiple Inquiries:

  • Rate Shopping: Multiple inquiries for the same type of credit (like a mortgage or auto loan) within a short period (14 to 45 days) are often treated as a single inquiry to minimize impact.

Credit Score Factors Affected:

  • New Credit: Hard inquiries fall under the "new credit" category, which makes up 10% of your credit score.
  • Overall Credit Health: While hard inquiries have a minor effect, multiple inquiries can add up and potentially lower your score more significantly.

3. Managing Hard Inquiries

Best Practices:

  • Limit Applications: Only apply for credit when necessary to avoid multiple hard inquiries.
  • Check Pre-Qualification: Use pre-qualification offers that involve a soft inquiry to gauge approval odds before applying.
  • Space Out Applications: If you need to apply for multiple credit accounts, try to space out the applications over time.

Monitoring Your Credit:

  • Regular Credit Checks: Regularly check your credit reports from Equifax, Experian, and TransUnion to monitor hard inquiries and overall credit health.
  • Dispute Unauthorized Inquiries: If you find unauthorized or incorrect inquiries on your credit report, dispute them with the credit bureaus.

4. Reducing the Impact of Hard Inquiries

Building Strong Credit:

  • Timely Payments: Ensure all credit accounts are paid on time to build a strong payment history.
  • Credit Utilization: Keep credit card balances low relative to your credit limits.
  • Credit Mix: Maintain a healthy mix of credit types, such as credit cards, loans, and mortgages.

Planning Applications:

  • Strategic Applications: Plan major credit applications, such as for a mortgage or auto loan, to minimize the impact of multiple inquiries.
  • Rate Shopping: Conduct rate shopping for loans within a short time frame to ensure multiple inquiries are treated as one.

5. Common Myths About Hard Inquiries

Myth 1: Hard Inquiries Always Significantly Lower Your Score

  • Fact: While hard inquiries can lower your score, the impact is generally small and temporary.

Myth 2: Checking Your Own Credit Results in a Hard Inquiry

  • Fact: Checking your own credit report is a soft inquiry and does not affect your credit score.

Myth 3: All Hard Inquiries Are Treated the Same

  • Fact: Credit scoring models often treat multiple inquiries for the same type of loan within a short period as a single inquiry.


Hard inquiries are a normal part of applying for credit, but understanding their impact and managing them effectively is crucial for maintaining good credit health. By limiting unnecessary applications, strategically planning your credit applications, and building strong credit habits, you can minimize the effects of hard inquiries on your credit score.

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About the Author

With over 20 years of experience in the business loan marketplace at Approvd, our expert has helped countless small business owners navigate the complexities of securing the right funding. Passionate about empowering entrepreneurs, our expert combines industry knowledge with a deep understanding of the challenges faced by small businesses today.

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