What is a Hard Credit Inquiry?

A hard credit inquiry will negatively impact your score, albeit only temporarily. Let’s learn a thing or two about what they are and how they work!

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While we cannot directly say the exact amount that hard inquiries will decrease your credit score, it is important to understand them. This category fortunately has a lower impact on your score than than all other credit score factors from what we can tell. Why is that? In my opinion, it is because these are a necessary evil. To increase your credit score, you essentially need to increase the total open accounts that you have and, in turn, your total credit limit. Let’s discuss further!

Hard Inquiries vs. Soft Inquiries

There are two ways that your credit score is checked, one hurts your score and one does not. A hard credit inquiry is conducted most of the time when you apply for a new source of credit or account. As mentioned above, this is something that just has to happen if you want to increase your score. Opening a new credit card, applying for a mortgage, sometimes even setting up an account with a utility or cable/internet company can result in a hard credit check. Those instances result in a hard check because you are applying for a new source of credit and the other party needs to ensure you are trustworthy and will pay in full and on time. That is really what you can boil down a credit score to, a numerical value of your trustworthiness.

Soft inquiries do not impact your score, and you can conduct them as often as you would like to. Tools like Credit Karma allow you to check your credit score at any time and do not impact your score. Being aware of and checking your credit score every month is an excellent habit to build.

It is important that you are aware of what kind of inquiry will be performed when you are in a situation where your credit will be checked. All you have to do is ask.

The good news? Hard inquiries only stay on your credit report for two years. They then fall off and it’s as if they never happened. Additionally, the impact on your score is minimal.

Let’s say, for example, that you found a new credit card you would like to apply for. If you apply and get the card, your score will go down when the hard inquiry is performed. Within a few months, though, the additional new account along with the higher credit limit (and thus lower credit utilization) will almost certainly send your score higher than it was before you applied for the card. Pending, of course, any additional changes.

Want to learn about other factors that impact your credit score? This article goes over the length of credit history factor!

In some instances, you can refrain from doing certain things if you ask whether the credit pull will be hard or soft and the answer is hard. For example, if you request a credit limit increase, there is a chance (though small) that they tell you it will result in a hard inquiry. Unless you’ve seen a significant increase in your income and are certain that your limit will (significantly) increase, it might simply not be worth doing! As with all things, it just depends.


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In Summary

When it comes to inquiries, the most important thing is that you are aware of which kind will be happening. Hard inquiries are required to level up your credit score, and they usually pay off in the long run!

As always, I truly appreciate you taking the time to read this! Please don’t hesitate to reach out and contact me with any thoughts, comments, questions, or suggestions!

You can find my contact information here!

– RCG

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