Is 6 Hard Inquiries Bad for Your Credit Score?

A “hard inquiry” occurs when a lender checks your credit report after you apply for new credit, such as a loan or credit card. This action can influence your credit score. This article explores the impact of hard inquiries, especially multiple ones, and offers strategies for managing them effectively.

Understanding Hard Inquiries

A hard inquiry, also known as a “hard pull” or “hard credit check,” happens when a financial institution reviews your credit file to evaluate your creditworthiness. This occurs when you formally apply for credit, including a new credit card, auto loan, mortgage, or personal loan.

Hard inquiries differ from “soft inquiries,” which do not impact your credit score. Soft inquiries occur when you check your own credit report, when a potential employer reviews your credit for a job application, or when lenders pre-approve you for offers. These soft pulls are for informational purposes and do not signal new credit-seeking behavior to credit scoring models.

How Hard Inquiries Affect Your Credit Score

A single hard inquiry results in a small, temporary dip in your credit score, often by fewer than five points. This minor impact is short-lived, with scores rebounding within a few months, assuming other credit behaviors remain positive. However, the cumulative effect of multiple inquiries can be more noticeable.

When several hard inquiries appear on your credit report in a short period, it can signal to lenders that you might be taking on too much new debt or experiencing financial distress. While each individual inquiry might have a minimal effect, a cluster of six or more inquiries could lead to a more significant, though still temporary, score reduction. Hard inquiries remain on your credit report for up to two years, but they only influence FICO credit scores for the most recent 12 months.

When Multiple Inquiries Are Grouped

Credit scoring models recognize that consumers “rate shop” for the best terms on certain types of loans. For this reason, multiple inquiries for the same purpose within a specific timeframe are treated as a single inquiry. This grouping mechanism, referred to as deduplication, applies primarily to installment loans like mortgages, auto loans, and student loans.

FICO scoring models may consider inquiries for these loan types made within a 14-to-45-day window as just one inquiry, depending on the model version. VantageScore models group inquiries within a 14-day rolling window. This allows you to compare offers from different lenders without excessively penalizing your credit score for each inquiry. This exception does not apply to credit card applications, where each application results in a separate hard inquiry that affects your score.

Managing Your Credit Inquiries

Managing your credit inquiries involves being strategic about when and how often you apply for new credit. Apply for new credit only when genuinely needed and after researching the terms and conditions. Many lenders offer pre-qualification processes that involve a soft inquiry, allowing you to gauge eligibility without affecting your score.

Regularly checking your credit reports from the three major credit bureaus helps you monitor for accuracy and identify any unauthorized inquiries. This practice allows you to dispute any hard inquiries you did not authorize or that resulted from identity theft. Beyond managing inquiries, maintaining a strong credit score involves consistent on-time payments, keeping credit utilization low, and cultivating a long credit history. These responsible credit behaviors help mitigate the impact of any necessary hard inquiries.