How Many Points Will My Credit Score Drop if I Receive a Hard Inquiry?

| Tedis Baboumian |

Your credit score is based on a combination of factors, such as your payment history, total outstanding debt and whether there are negative items on it such as bankruptcy or collections accounts. Another item that is factored into your credit score is how many hard inquiries have been made against your credit report recently. Many people wonder “How many points will my credit score drop if I receive a hard inquiry?”

Hard Inquiries Versus Soft Inquiries

There are two types of credit inquiries, and they’re referred to as hard inquiries and soft inquiries. A soft inquiry is when your credit is pulled for any reason other than applying for new credit, such as when it is pulled as part of a background check. Examples include applying for a new job or credit card companies inquiring to see if you qualify for certain offers. A soft inquiry doesn’t affect your credit score.

Whenever you apply for a loan, mortgage or credit card, you authorize potential lenders to have access to your credit report. This is known as a hard inquiry, and each hard inquiry stays on your credit report for around two years. This is why it’s a good idea to avoid opening a lot of new credit cards or loans at the same time.

The Impact Inquiries Have on Your Credit Score

A single hard inquiry against your credit shouldn’t have a big impact on your score but typically causes your score to drop 5 points or less. If you have a good credit history with no issues, the drop may be even less than that. Any drop related to a single hard inquiry is temporary, and your score should bounce back quickly if you don’t have any other credit issues.

If you’re shopping for a major purchase such as a car, home or student loan, your information may be sent to multiple lenders while you try to find the best interest rate or loan terms. When multiple inquiries are done for this purpose in a short period of time such as 30 days or less, most credit score models don’t penalize you for each one. If you open multiple accounts at the same time, that may make you appear to be a greater credit risk.

Your Credit Score

Compared to other factors that may affect your credit score, hard inquiries have a relatively minor impact on your credit score. While inquiries are one way for potential lenders to assess how risky it is to loan money to you, inquiries are only a small part of what makes up your credit score. It’s only 10 percent of what makes up a FICO score.

The Accuracy of Your Credit Report

Hard inquiries on your credit report that you don’t recognize could be a sign that someone has obtained your personal information and is trying to use it to open new accounts. Review what’s on your credit report to make sure the information is accurate. If you find inaccuracies on your credit report and need expert help disputing them, get in touch with Dovly. We’re an AI credit engine and we know what it takes to correct your score quickly. Try it risk-free with our free membership tier.

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