How Long Do Hard Inquiries Stay on Your Credit Report?

FT Contributor  | 

Hard inquiries are documented on your credit report for two years. However, the hard inquiry will only negatively affect your credit score for one year. It’s important to understand the negative effects a hard inquiry can have on your credit report, especially if you plan to make a financial decision or apply for a loan or credit card soon.

Your credit report is a collection of your behavior and habits as a consumer. The higher your credit score, the more likely you are to qualify for loans and credit cards. With a high score, lenders will have confidence that you’re a responsible consumer who is dedicated to paying off debt.

It’s important to understand what affects your credit score, especially if you hope to make big purchases or important financial decisions in the near future. Not only is your credit score a factor that’s considered when determining if you qualify for a loan; it can also be used to decide whether to approve you for a rental home or credit card.

The main components that are used to determine your credit score include your debts, open accounts, and debt payment history. However, in addition to these components, you should also consider when people will check your credit. Your credit report can be affected by the number of hard inquiries on it.

Hard Inquiry vs. Soft Inquiry

There are two types of inquiries that can be made when your credit is checked. A soft inquiry has no negative effect on your credit score and isn’t documented in your report. A soft inquiry is made when:

  • You check your own credit score.
  • A lender runs your score to provide you with a pre-approval letter.
  • Your current credit card company runs an inquiry to perform account maintenance.

So, what is a hard inquiry? A hard inquiry is made when a credit card company or loan officer formally orders your credit report with your permission. When you attempt to obtain a new line of credit, your credit report is pulled by the business and a hard inquiry is recorded on your report. This happens when you apply for a loan or mortgage, and applying for a credit card affects your credit score in this way as well.

How Much Does a Hard Inquiry Affect a Credit Score?

The negative impact your report experiences from a hard inquiry credit check is usually minimal. If your credit report is not extensive and you don’t have many positive elements documented, such as account balances you’ve paid off or debt you’re responsibly minimizing each month, the impact can be more severe.

While the negative effect is usually negligible, the specific ramifications may vary and aren’t easily predicted. Keep in mind, the decrease in your credit score due to the inquiry is temporary and will only affect your score for one year.

Rate Shopping Exceptions

Since you know a hard inquiry has a negative effect on your report, you may be concerned about having too many inquiries on your credit history. An excessive number of hard inquiries has a negative impact on your score because it can be a sign that you’re taking out several loans or applying for multiple credit cards and increasing your debt.

One exception to this is rate shopping. Don’t feel like you can’t visit multiple lenders to find the best interest rate and loan terms for an auto loan, home mortgage, or student loan because you want to save your credit score from the negative effects of multiple hard inquiries. The FICO scoring system that’s used to report your credit score counts multiple hard inquiries within a 45-day period as a single inquiry.

Rate shopping is considered a positive and responsible financial exercise for consumers to take part in. Therefore, FICO made sure that consumers weren’t penalized for attempting to obtain the best terms and rates for their loans. When you fill out a student loan, car loan, or mortgage application, you must authorize the lender to pull your credit report. As long as you do all your rate shopping within the 45-day period, only one hard inquiry will show up on your report and potentially affect your score.

Why Does a Hard Inquiry Affect a Credit Score?

Hard inquiries on your credit report have negative effects because they can be a sign that you’re applying for too much debt. A lender feels less confident in your ability to pay off a loan if you have a substantial amount of debt or if you’re in the process of applying for additional loans or credit cards. A hard inquiry lowers your score because it may mean that you’re attempting to take on more debt that you may not be able to handle or responsibly pay off, making you a greater financial risk.

Therefore, if you want to keep your report pristine and your credit score high, you shouldn’t apply for multiple credit cards or loans in a short period of time. Even if you don’t end up accepting the loans or using the credit cards, you can’t remove authorized credit inquiries from your credit report. Since you gave permission for these businesses to pull your credit, these hard inquiries will remain documented for two years. However, if you didn’t consent to these credit inquiries, you can use this credit inquiry removal letter template to file a dispute. If your dispute is settled, these inquiries will be removed and the negative effects on your score reversed.

A soft inquiry doesn’t have an effect on your credit score because it can be a sign that you’re a responsible consumer. If you’re checking your own score frequently, it means you’re taking the necessary steps to ensure you’re financially healthy. When a business performs a soft inquiry, it doesn’t mean an application is being completed — you haven’t given permission for a hard inquiry yet. Therefore, your score isn’t negatively affected.


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This post was updated November 7, 2019. It was originally published November 7, 2019.