How much does a credit inquiry lower your credit score?

How Credit Inquiries Affect Your Credit Score

Credit inquiries are a common part of the credit scoring process. When you apply for a new line of credit, the lender will typically request a copy of your credit report. This report will include a list of all the credit inquiries that have been made on your behalf in recent months.

Hard Inquiries vs. Soft Inquiries

There are two types of credit inquiries: hard inquiries and soft inquiries.

• Hard inquiries are made when you apply for new credit, such as a loan or credit card. These inquiries will stay on your credit report for two years.
• Soft inquiries are made when you check your own credit score or when pre-approved credit offers are extended to you. These inquiries do not affect your credit score.

Impact of Hard Inquiries

Hard inquiries can have a small negative impact on your credit score. The effect is typically minor, however, and it will usually only last for a few months.

The impact of a hard inquiry on your credit score will depend on a number of factors, including:

• The number of hard inquiries you have. The more hard inquiries you have, the greater the impact on your score.
• The age of the hard inquiries. Hard inquiries that are more than a year old will have less impact on your score than recent inquiries.
• Your overall credit history. If you have a long history of good credit, the impact of a hard inquiry will be less than if you have a short or poor credit history.

Avoiding the Negative Impact of Hard Inquiries

There are a few things you can do to avoid the negative impact of hard inquiries on your credit score:

• Shop around for the best interest rates before applying for credit. When you shop around, you can get pre-approved for multiple loans or credit cards without triggering a hard inquiry.
• Only apply for credit that you need. If you don’t need a new loan or credit card, don’t apply for it.
• Be aware of the credit inquiries that are made on your behalf. If you see a hard inquiry on your credit report that you don’t recognize, contact the lender to ask why it was made.

Conclusion

Credit inquiries are a normal part of the credit scoring process. However, it is important to be aware of how hard inquiries can affect your score. By following the tips above, you can minimize the negative impact of hard inquiries and keep your credit score healthy.