How many points will my credit score drop?

How Many Points Will My Credit Score Drop After a Hard Inquiry?

A hard credit inquiry occurs when a lender or other authorized party checks your credit report as part of the loan application process. These inquiries can temporarily lower your credit score, but the impact is usually small.

According to the Fair Isaac Corporation (FICO), a single hard inquiry typically results in a credit score reduction of less than five points. This is because FICO’s scoring model places less weight on hard inquiries than on other factors, such as payment history and credit utilization.

The impact of a hard inquiry on your credit score will vary depending on several factors, including:

• Your credit history: Individuals with a long and positive credit history are less likely to experience a significant drop in their credit score after a hard inquiry.
• The number of recent hard inquiries: Multiple hard inquiries in a short period of time can have a cumulative effect on your credit score.
• The type of loan you are applying for: Hard inquiries for certain types of loans, such as mortgages and auto loans, may have a slightly greater impact on your score than inquiries for credit cards or personal loans.

It’s important to note that hard inquiries only stay on your credit report for two years. After that, they are automatically removed and will no longer affect your credit score.

How to Minimize the Impact of Hard Inquiries:

• Shop for loans around within a short period of time. When you apply for multiple loans, try to do so within a 14- to 45-day window. FICO considers multiple inquiries within this time frame as a single inquiry for scoring purposes.
• Avoid unnecessary credit applications. Only apply for credit when you need it. Each hard inquiry can temporarily lower your score, so it’s best to only apply when necessary.
• Monitor your credit report regularly. Keep track of any hard inquiries on your credit report and be aware of any unauthorized inquiries. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year at annualcreditreport.com.

Remember: Hard inquiries are a normal part of the loan application process and typically have a minimal impact on your credit score. By understanding how hard inquiries work and taking steps to minimize their impact, you can maintain a strong credit profile.