How Many Credit Checks Can You Have in a Month?

A credit check, or credit inquiry, occurs when a lender reviews your financial history to assess your reliability and likelihood of repaying borrowed money. Lenders use this information to approve credit applications and set terms. While there’s no strict limit on monthly credit checks, their type and frequency influence your financial health. This article explains different credit inquiries, their impact on your credit score, and strategies for managing them effectively.

Understanding Credit Inquiries

Credit inquiries are requests to view your credit report. They fall into two distinct categories: hard inquiries and soft inquiries. Understanding their differences is important for comprehending their impact on your financial standing.

A hard inquiry, or hard pull, occurs when a lender accesses your credit file to assess creditworthiness. This typically happens when you formally apply for new credit, such as a loan or a credit card. It requires your permission, is recorded on your credit report, and remains visible for up to two years. Common scenarios that result in a hard inquiry include applying for a new credit card, a personal loan, an auto loan, or a mortgage. Requests for a credit line increase on an existing credit card may also trigger a hard inquiry. Private student loans and federal direct PLUS loans also trigger hard inquiries.

In contrast, a soft inquiry, or soft pull, is a credit report review that does not impact your credit score. These inquiries often occur without your direct permission, as they are not tied to a specific application for new credit. Soft inquiries are recorded on your credit report but are generally only visible to you and do not influence your score. Examples of soft inquiries include checking your own credit report, receiving pre-approved credit offers, employer background checks, insurance rate setting, and tenant screening. Existing creditors may also use them to review accounts or evaluate promotional eligibility.

The key distinction between these two types of inquiries lies in their effect on your credit score. Only hard inquiries can cause a temporary decrease. Soft inquiries do not affect your credit score and pose no risk.

Impact of Multiple Inquiries

Hard credit inquiries can cause a small, temporary reduction in your credit score, typically fewer than five points on a FICO Score. While these inquiries remain on your credit report for up to two years, their direct impact usually lessens or disappears within 12 months.

Multiple hard inquiries within a short timeframe can signal higher risk to lenders. This pattern could suggest that an individual is either desperate for credit or attempting to take on too much debt rapidly. Lenders might view such behavior as an indication of financial instability, potentially making them more hesitant to extend new credit.

However, credit scoring models like FICO and VantageScore recognize that consumers often “rate shop” for the best terms on certain types of loans. To accommodate this, multiple inquiries for the same type of loan within a specific window are often treated as a single inquiry for scoring purposes. This allows consumers to compare offers without unduly penalizing their credit scores.

For instance, when applying for a mortgage, auto loan, or student loan, multiple inquiries made within a focused period are typically grouped. FICO Score models generally consider inquiries within a 14-day to 45-day window as a single event, depending on the model version used. This grouping ensures that shopping around for the best interest rates on a single large purchase does not disproportionately harm your credit score. This exception generally does not apply to credit card applications, where each application results in a separate hard inquiry.

Soft inquiries have no bearing on your credit score. They do not factor into credit scoring calculations and are not viewed by lenders as new credit applications.

Strategies for Managing Inquiries

Managing credit inquiries helps maintain a healthy credit profile. Regularly checking your own credit report is a soft inquiry that doesn’t negatively impact your credit score. You are entitled to a free copy of your credit report from each of the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—annually through AnnualCreditReport.com. Checking these reports allows you to review all inquiries and identify any that are unfamiliar or unauthorized.

If you discover an unauthorized hard inquiry on your credit report, dispute it promptly. Begin by contacting the company that made the inquiry to seek clarification. If it is indeed an error or fraudulent, report it to the Federal Trade Commission and dispute it directly with the credit bureaus, providing any supporting documentation.

Apply for new credit only when genuinely needed. Applying for multiple different types of credit, such as a new credit card and a personal loan, within a short period can lead to several hard inquiries. This may signal to lenders that you are experiencing financial difficulties, potentially reducing your approval odds or leading to less favorable terms.

Understand the distinction between pre-approvals and full applications. Prequalification or pre-approval offers typically involve a soft inquiry, allowing you to gauge your eligibility and potential terms without affecting your credit score. Only proceed with a full application, which results in a hard inquiry, once you are confident in your choice and ready to commit.

Strategic rate shopping for specific loan types minimizes the impact of inquiries. For mortgages, auto loans, and student loans, credit scoring models typically group multiple inquiries made within a concentrated period, usually 14 to 45 days, treating them as a single inquiry. This allows you to compare offers from various lenders to secure the best rates without incurring multiple score reductions.

Before submitting any credit application, ask the lender whether the credit check will be a hard or soft inquiry. This helps you make an informed decision and avoid unnecessary hard inquiries.

Space out credit applications, especially for different credit types, to allow your score to recover from previous hard inquiries. Waiting several months, perhaps three to six months, between applications allows any temporary score dips to rebound. This approach demonstrates responsible credit management and can improve your chances of approval for future credit needs.