Your credit score is based on a combination of factors. The most important factors are the history of paying your bills on time and the amount of available credit that you’re using, which is known as credit utilization. Credit inquiries make up 10 percent of your FICO score. So, you may be wondering how to keep credit inquiries from hurting your score.
Hard Versus Soft Credit Pulls
There are two different types of credit pulls. A soft credit pull may be done for any reason other than a new financial obligation. Examples are employer background checks and pre screening for credit card offers. This type of credit pull has no impact on your credit.
A hard inquiry is done when you apply for new credit, such as a mortgage, loan, or credit card. Each time a hard inquiry is done, it shows on your credit report and may lower your score by a small amount. If you’re being careful to take care of your credit by paying your bills on time and controlling your spending, a single hard inquiry won’t do much damage to your credit score.
Timing of Credit Applications
Applying for several different loans or credit cards at the same time can hurt your credit. Lenders may see multiple hard credit pulls as a sign that you may be getting into financial trouble and that you may be a credit risk. So, it’s best to space applications at least 90 days apart.
If you’re trying to find the best rate on a mortgage or car loan, you can keep credit inquiries from hurting your score by doing your rate shopping in a two-week period. Multiple inquiries for the same purpose are considered one hard credit pull if they’re done fairly close to each other. Older credit scoring models limited this activity to 14 days, but some newer scoring models allow up to 45 days.
Reducing the Impact of Hard Credit Inquiries
Hard inquiries stay on your credit report for two years. If your credit score is strong, having more than one hard credit pull won’t hurt you much. Be proactive about having a good credit score. Pay all your bills on time and pay more than the minimum amount due whenever you can. Avoid using more than 30 percent of the available credit on revolving accounts. Apply for new credit only when you need it.
Knowing What’s on Your Credit Report
Whenever you’re considering applying for new credit, check what’s on your credit report to make sure only accurate information is being reported. A surprising number of people find mistakes on their credit reports, which may be anything from a wrong address to incorrect balances or payment history or they may even find an account that shows up on their credit report that doesn’t belong to them.
Dispute any errors you find right away, or to make it easy on yourself, let Dovly do it for you. Dovly is an AI credit engine that helps you track, manage, and fix your credit. Try it risk-free with our free membership tier. Contact Dovly today.
