How Does a Hard Inquiry Affect Your Credit Report?

When you apply for a loan, credit card, or even an apartment, the company you're applying with may run a hard inquiry on your credit. This type of credit check can slightly lower your credit score and stay on your credit report for as long as two years. However, the impact on your credit score usually doesn't last longer than a few months.

Read on to learn how hard credit inquiries work, how long they stay on your credit report, how they affect your FICO score, and what to do if there's one on your report you didn't authorize.

What is a hard credit inquiry?

A hard credit inquiry happens when a lender or credit card company checks your credit report from one of the three major credit bureaus: Equifax, Experian, or TransUnion. This typically happens after you apply for a loan, credit card, or other type of financing. Unlike a soft inquiry, which doesn't affect your credit score, a hard inquiry will likely have a negative impact on your credit score.

How long does a hard inquiry stay on your credit report?

When a hard credit inquiry appears on your credit report, it typically stays there for two years. However, the exact timeframe can vary based on the credit scoring model used by the credit bureau. For example, although the hard credit inquiry may remain on your report for two years, the inquiry will only impact your FICO credit score for one year. This is because FICO only factors in hard inquiries from the past 12 months when calculating your score. However, the decline that a hard inquiry causes in your credit score typically doesn't last longer than a few months.

How much does a hard inquiry affect your credit score?

The exact impact of a hard credit inquiry varies, but you can generally expect to see a dip in your credit score of around five points or less. Typically your score will rebound from that drop within about three months. However, if you apply for multiple different types of loans or credit cards within a short timeframe, the hits to your credit score can add up and might have a longer-lasting negative impact.

If you're shopping around for a specific type of loan, such as a car loan or mortgage, most credit scoring models will group multiple inquiries made within a 30-day window into a single hard inquiry. This helps lower the impact on your credit score while still allowing you to compare loan offers.

Can you remove a hard inquiry from your credit report?

If you have a legitimate hard inquiry on your credit report, you cannot have it removed. However, if you have an unauthorized hard credit inquiry on your credit report, you can dispute it with the credit bureaus. In many cases, credit bureaus will remove an illegitimate hard credit inquiry if you bring it to their attention.

You can check for unauthorized hard inquiries by reviewing a copy of your credit report on AnnualCreditReport.com. If you spot an inquiry you don't recognize, get in touch with the credit bureau as soon as possible to start the dispute process.

Hard inquiries vs. soft inquiries: What's the difference?

• Hard inquiry: This happens when you apply for a loan or credit card and authorize the lender or creditor to check your credit report. It can cause a small dip in your credit score and stays on your credit report for as long as two years.
• Soft inquiry: This doesn't impact your credit score and can happen with or without your permission. For example, when a lender prequalifies you for a loan offer or when you check your own credit report.

Tips to minimize the impact of hard inquiries

Hard credit inquiries can impact your credit, but there are steps you can take to limit the damage.

“I suggest clients pull their own credit reports one to two times per year, but especially before requesting credit,” says Heidi Clemons, an accredited financial counselor and financial coach at Managed Expectations.

This can help you catch any errors before they affect your application. If you find a mistake, you can contact the credit bureaus to dispute it and have it corrected.

Being strategic about how and when you apply for credit can also help.

“Many credit applications within a brief time span will result in accumulated hard inquiries on your credit report,” says Oliver Morrisey, a lawyer at Empower Wills & Estate Lawyers.

However, when you apply for the same type of loan — like a mortgage or auto loan — through multiple lenders in a short period, credit scoring models usually group those applications together as one inquiry. This is helpful if you're shopping around for the best rate since it limits the overall effect on your credit score.

You can also use prequalification tools to avoid unnecessary hard inquiries. Prequalification lets lenders give you an estimate of the rates or terms you might qualify for based on a soft credit check. Since it doesn't impact your credit score, it's a useful way to compare options before deciding where to formally apply.