What Is A Hard Inquiry And How Does It Affect Your Credit Report?
The truth about inquiries on your credit report
A hard inquiry happens when you apply for a new line of credit, such as a credit card or loan. A creditor will request to look at your credit file to help determine how risky it is to lend to you!
Hard inquiries are often mistaken for soft inquiries. Hard inquiries show up on your credit report and they affect your credit score. It's best to understand these different types of requests when applying for new credit, but also why it's important not to let them pile up because eventually - over time - they can affect your credit score.
How do hard inquiries affect your credit score?
Hard inquiries are credit checks that are done when you apply for credit in some way. This can include anything from loans to credit cards or utilities. Credit inquiries have a negative impact on your score initially, but do not stay there permanently.
The bad news is they will stay on your report for two years. The good news is they will no longer have an effect on your score after 6 months to a year.
If several hard inquiries are made in a short period of time, it could mlike you are struggling financially and are unable to keep up with payments for what you have already acquired.
How long does a hard inquiry last?
Hard inquiries will stay on one's credit report for two years. While lenders can see all inquiries made during this period, the inquiries only directly affect a score for a maximum of a year at most. That means that a credit card may initially drop your score if it's being viewed as a hard inquiry even if you aren't applying until later down the road.
Provided you have been managing your cards responsibly, the effect will wear off over time and these kinds of drops should reduce as your history builds up more positively. To help maintain a strong credit history, apply just for those cards that you truly need from those that you simply want to have - doing so can assist in keeping your score running high!
It’s always better to secure your credit when you are in the process of deciding on finance products. A hard inquiry or two won’t ruin your credit, but repeatedly trying out financial options in rapid succession will definitely reflect in your file.
Credit Health can help you better understand your credit report, and shape your financial future.