Key Takeaways
- Hard inquiry checks credit with your consent.
- Lowers credit score temporarily by 5-7 points.
- Stays on credit report for two years.
What is Hard Inquiry?
A hard inquiry, also called a hard pull, occurs when a lender reviews your full credit report after you apply for new credit, such as a loan or credit card. This process requires your authorization and can slightly lower your credit score temporarily. Understanding the Fair Credit Reporting Act (FCRA) helps you know your rights regarding these inquiries.
This inquiry stays on your credit report for two years but only affects most credit scores for about 12 months.
Key Characteristics
Hard inquiries have distinct features that differentiate them from other credit checks:
- Authorized Access: Lenders must have your consent before performing a hard inquiry.
- Credit Score Impact: Typically causes a 5-7 point drop in your credit score, depending on your credit profile.
- Duration on Report: Remains visible on credit reports for two years but influences scores for only one year.
- Common Triggers: Applying for new credit cards, loans, or requesting credit limit increases.
- Distinguishable from Soft Inquiries: Soft inquiries, such as self-checks or pre-approvals, do not affect your score.
- Dispute Rights: Unauthorized hard inquiries may indicate identity theft and can be disputed.
How It Works
When you apply for credit, you usually give permission through a credit application checkbox that allows the lender to perform a hard inquiry. The lender then requests your credit report from one or more major bureaus to assess your creditworthiness.
This inquiry records the date, lender’s name, and bureau involved, appearing on your credit report for two years. Multiple inquiries in a short time frame, such as when rate shopping for a mortgage, may be grouped to minimize score impact.
Examples and Use Cases
Hard inquiries appear in various lending scenarios and credit decisions:
- Credit Card Applications: Applying for cards featured in guides like best credit cards for good credit triggers a hard pull from the issuing bank.
- Auto Loans: When financing a vehicle, lenders such as Delta (in their travel-related credit offers) may perform hard inquiries to evaluate your loan eligibility.
- Personal Loans and Lines of Credit: Applying for personal loans or credit lines often results in a hard inquiry to verify your credit status.
- Credit Limit Increases: Some credit card companies conduct hard pulls when you request a higher limit to reassess risk.
Important Considerations
While a single hard inquiry causes a minor credit score dip, multiple inquiries in a short period can signal financial distress to lenders. Space out your credit applications to minimize cumulative effects.
Regularly monitoring your credit report can help you spot unauthorized hard inquiries early. Utilize resources like the best credit cards guides to explore credit options that might allow prequalification without a hard pull.
Final Words
Hard inquiries can slightly lower your credit score temporarily, so limit unnecessary credit applications to protect your rating. Monitor your credit report regularly to ensure all inquiries are authorized and accurate.
Frequently Asked Questions
A hard inquiry, also called a hard pull, happens when a lender reviews your full credit report after you apply for new credit. It usually requires your permission and can temporarily lower your credit score by a few points.
A hard inquiry remains visible on your credit report for two years, but it only affects most credit scores, like FICO, for the first 12 months.
Hard inquiries typically happen when you apply for new credit, such as a credit card, loan, mortgage, or when requesting a credit limit increase, and you must usually give consent for the lender to check your credit.
A single hard inquiry can lower your credit score by about 5 to 7 points temporarily, with the impact fading over time. Multiple inquiries in a short period can cause a bigger drop because they suggest higher financial risk.
No, hard inquiries require your authorization. If an unauthorized hard inquiry appears on your credit report, you have the right to dispute it since only approved parties can perform them without a court order.
Hard inquiries happen when you apply for credit and can lower your score temporarily, while soft inquiries, like checking your own credit or pre-approvals, do not affect your score and often do not require permission.
If you apply for several loans or credit cards within a short time, multiple hard inquiries can occur, which may lead to a larger temporary drop in your credit score because it signals potential financial distress.
