What to Know About Hard Inquiries on Your Credit Report

When you apply for a mortgage, a personal loan, a credit card, or an auto loan, the lender checks your credit report to determine your creditworthiness. When that happens, it’s called an “inquiry.” And there is such a thing as too many inquiries. Here’s what you need to know.

Hard Inquiry vs. Soft Inquiry

There is a difference between hard inquiries and soft inquiries. The former hurts your credit score, the latter does not.

• Hard inquiry is when a lender reviews your credit report — think mortgage, credit card, and loan applications.
• Soft inquiry is when a company or person checks your credit score as part of something that isn’t linked to credit, like a background check or a credit card company pre-approving you for a card.

How Inquiries Work

Multiple hard inquiries over a period of time can lower your credit score and hurt your chances of getting approved for credit. Credit inquiries can stay on your credit report for up to two years. It’s ultimately up to the lender to decide how many inquiries are too many. And how much your score is impacted depends on your unique credit report. Typically, the better your credit score overall, the less impact hard inquiries will have.

Rate Shopping

One thing to keep in mind with inquiries is that when you rate shop — getting quotes to find the best interest rates on mortgages, loans, etc — your score won’t be hit as hard. VantageScore treats multiple inquiries made within 14 days as one inquiry, as long as they are all for one particular type of loan. FICO allows multiple inquiries within 45 days to be treated as a single inquiry. So you have some leeway to get multiple rate offers and not be punished.