How Long Do Hard Inquiries Affect Your Credit Score?

Hard inquiries can remain on your credit report for up to two years, but they don’t have a direct impact on your score.

The lender will do what might be seen as a hard credit check every time you apply for a new line of credit, credit card, auto loan, mortgage, or another kind of loan. Lenders have lately asked for credit checks, and your credit record shows them as a hard inquiry. These are not like soft queries, which rarely at all impact your credit score.

Indeed, hard credit inquiries do reduce your credit scores for a brief period and show up on your credit record for two years; yet, with time the effect on your credit score becomes less. This is a comprehensive picture of how credit searches impact your credit score and the waiting period before the score recovers.

Why Do Credit Inquiries Lower My Credit Score?

Whenever you apply for a new loan or a credit card, the credit provider runs a hard search on your credit report to decide whether to grant you credit or not. Hard inquiries suggest that you are actively seeking new credit accounts which is considered risky by credit companies. The more you apply for credit cards or loans, the higher risk you are to potential creditors according to them. Even though inquiries may be needed to get new credit accounts, many inquiries within a short period can indicate an irresponsible attitude and may decrease the credit score.

How Long Are Hard Credit Inquiries Reported to Credit Bureaus?

Any hard inquiries resulting from your credit applications will remain part of your credit report for two years. Nevertheless, such requests will only impact your credit rating for the first year. The inquiries do not affect your credit scores for more than a year after they have been made.

This post is going to give you an idea of how much your credit scores are going to be affected once you make the hard inquiries.

Sometimes, a single new hard credit check can pull your credit scores down by less than five points. But if you have more new inquiries in a short time, the effect will be more serious on your credit score. Although one or two new inquiries are unlikely to take much toll on your credit scores, having five or more of them on your credit reports within a year is likely to decrease your credit scores considerably. Several hard inquiries indicate that you are eagerly seeking credit which is considered by creditors as very risky.

Here is a more detailed look at how much of a point drop you can expect by the number of inquiries within one year.

1 Inquiry: 2 to 4 points This is an excellent point made by the author as it assists in the identification of the study’s limitations. 2 Inquiries: While the time factor remains consistent, the actual rating may vary between 5 to 10 points. 3 to 4 Inquiries: 25 points 5 or more Inquiries: Greater than 50 points

As you can see, multiple inquiries within a short period can add up against your credit score. However, not all hard inquiries are equal. Shopping for an auto loan or mortgage within a short period is not as bad for your scores as it is when done over an extended period. Credit scoring systems know that you are rate checking and hence will consider several inquiries for an auto, student loan, or mortgage as one inquiry within a short period such as a thirty or forty five day period. Still, attempt to finish your rate shopping and submit applications as soon as you can instead of submitting applications at random intervals of weeks or months. Each mortgage and auto loan inquiry does not weigh as much as the other inquiries, but jointly they can weigh as much if they are accompanied by other nonrelated inquiries.

How Long Do Inquiries Remain On Your Scorecard?

The credit score will be affected for the one year following the inquiry, though not significantly. Nevertheless, the impact of inquiries lessens quite substantially after some time. Here is a rough estimate of how long hard inquiries will negatively impact your credit score.

0 to 6 Months: Largest negative effect, will reduce the credit score by several points or even more depending on the number of new inquiries
6 to 12 Months: Still detrimental to your score but to a lesser extent
12 to 24 Months: Minimal to no effects on your credit rating at this stage

Why do Inquiries affect Credit less over time?

The reason why the negative credit scoring impact of inquiries drops sharply depends on several factors. First, recent inquiries indicate that you may have new accounts and more credit-related obligations which are considered risky. However, over time when no other account is opened, it is apparent the inquiries were not an indication of additional credit liabilities. Second, when the first inquiries show up, it shows that credit shopping is in progress. However, the longer it takes between two credit reports, the less likely you are to actively seek credit. In conclusion, the perceived risk declines with time, and thus the credit-scoring effect of inquiries reduces rapidly.

How to Avoid Hard Inquiries When Applying for Credit?

To limit the number of inquiries on your credit reports, follow these tips.

Don’t apply for credit for which you are likely to be rejected due to your credit scores and or income levels. Do not apply for multiple cards that will lead to declined applications and just increase the number of hard inquiries.
Refine it to one or two choices for the loan before filling out a formal application after a comparison of interest rates and identify the lender who is likely to give you approval.
It is advisable not to apply for more credit within the first 12 months of opening a credit card or a loan. Applying for too many credit lines recently will affect the credit score negatively so avoid this.
Lend only that any soft inquiry which does not impact on your credit scores should be made by the lenders at all times. This enables you to shop rates while ensuring that few inquiries are made. You still will need hard inquiries when applying for credit, but can compare and investigate options with soft checks sooner.

The Bottom Line

One new credit inquiry will generally result in a small and temporary decrease in your credit score. However, the more questions you ask in a short period, the more impact your credit rating will have. Reduce the number of hard inquiries by only applying for a job in places that you know you can qualify due to your credit record. Hard inquiries remain on your credit report for 24 months while they affect your credit score only for the initial 12 months with the most significant effect visible in the first six months. Therefore, even though credit checks are usually required if one thinks of acquiring new credit, one should spread the applications across several months to allow the short-term decline in the scores to gradually resolve.

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