Hard Inquiries and Soft Inquiries

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Hard Inquiries and Soft Inquiries

There are two kinds of inquiries that can occur on your credit report: hard inquiries and soft inquiries. While both types of credit inquiries enable a third party, such as you or a lender, to view your credit report, only hard inquiries can negatively affect your credit score.

What is a hard inquiry?

Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision. They commonly take place when you apply for a loan, credit card or mortgage, and you typically have to authorize them.

Hard inquiries could lower your credit score by a few points and may remain on your credit report for two years. Fortunately, as time passes, the damage to your credit score usually decreases or disappears, often even before the hard inquiry falls off your credit report.

 

A hard inquiry can stay on your report for 2 years, but it may not hurt your score as much as you'd think. [Tweet this]

 

What is a soft inquiry?

Soft inquiries typically occur when a person or company checks your credit report as part of a background check. Examples include employer background checks, getting pre-approved for credit card offers and checking your own credit score. Unlike hard inquiries, a soft inquiry may occur without your permission. However, they won't affect your credit score. Soft inquiries may or may not be recorded in your credit report, depending on the credit bureau.

One of the biggest credit misconceptions is that checking your own credit score using companies like Credit Karma will hurt your credit score. This is not the case. You can check your credit scores at Credit Karma as often as you like without affecting your credit score.

Examples of Hard Versus Soft Inquiries

Trying to figure out what type of inquiry will be placed on your report? Here's a general guide.

Hard Inquiries
Usually
  • Applying for an auto loan, student loan, business loan or personal loan
  • Applying for a credit card
  • Applying for a mortgage
Sometimes
  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account
  • Requesting a credit limit increase
  • Getting a cell phone contract
Soft Inquiries
Usually
  • Checking your own credit score
  • Pre-approved credit card and loan offers
  • Background check, such as those done by employers
Sometimes
  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account


If you're unsure of whether a financial action you're about to take will result in a credit inquiry, ask the financial institution or company. And if a financial institution or company informs you that they will be checking your credit, ask them to distinguish whether or not it is a hard or soft inquiry.

Why Hard Inquiries Hurt Your Credit Score

While hard inquiries are necessary for certain financial actions, such as applying for a loan or credit card, they should be limited as much as possible. Your credit score may be penalized for multiple hard inquiries because applying for too much credit at one time may indicate that you're desperate for credit or aren't able to qualify for the credit you need. While one hard inquiry will usually just knock a few points off your credit score (if any), multiple hard inquiries in a short amount of time may cause significant damage to your score.

Keep your hard inquiries to one or two a year if you can. Credit Karma data shows that on average, consumers with lower numbers of hard credit inquiries have higher credit scores.

How to Dispute Hard Credit Inquiries

If a hard inquiry occurred without your permission, check your credit reports to see the full details of the inquiry and determine if you should attempt to dispute it.

Note that you can only dispute hard inquiries that have occurred without your permission. If you've authorized the hard inquiries, it generally takes up to two years for them to fall off your report.

Conclusion

Before applying for credit, take time to build your credit score. With a higher credit score, you may improve your chances of being approved for the financial products you want at the best terms and rates.

To keep track of hard inquiries, check your credit scores and credit reports at Credit Karma. In addition to providing you with your free credit scores from TransUnion and Equifax, Credit Karma can notify you of any important changes to your TransUnion credit report, including any new hard inquiries.

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All Comments

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2 Contributions
6 People Helped

Helpful to 6 out of 7 people

The whole credit score thing is a sham.  I had a score of 800+, but it dropped below 800 because of hard inquiries.  I purchased a new car in Dec, 2013 and so there were 2 hard inquiries then.  In May of 2015, my car was destroyed in a tornado and I had to purchase a new car - add a couple of more hard inquiries.  Then, in Oct of 2015, my car was totalled in a flood - add a couple more hard inquiries and voila - credit score lowered!  In this day and age, they can surely come up with a  smarter system!  I know what hard inquiries are supposed to represent, but it is very misleading.  My most recent car loan, for instance, was a signature loan!  I didn't even have to use the car as collateral.  Yet, because I checked with 2 different places, my score is lowered?  That is BS.

1 Contribution
1 Person Helped

Helpful to 1 out of 1 people

please just as easy as it was to dispute collection CREDIT KARMA DOES NOT HELP WITH HARD AND SOFT INQUIRIES WHY NOT HELP EVERYONE ALL THE WAY IT A SET UP FOR FAILURE YOUR SITE WHEN PRESS TAB TO DISPUTE TAKES YOU TO ARTICLE PAGE FIX THAT THUMBS DOWN WHEN I SAW THIS PLUS YOUR SITE RECOMMENED A CREDIT CARD I WAS DECLINED MY SCORE TANKED NO HELP TO DISPUTE HARD INQUIRES REALLY LONG PROCESS IF I DO IT ON MY OWN SO DIRTY GAME YOU PLAY FIX THIS

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4 People Helped

Helpful to 4 out of 5 people

The most important thing related to hard inquiries or any inquiry affecting your credit score is to keep this factor in mind against two more important factors on your score:  Credit Utilization, which you want to drive downward if possible, and Age of Accounts, which you want to increase.  

Hard inquiries are Low Impact, and have even less impact as the time between now and your inquiry lengthens.  Look at accounts where your Credit Utilization is higher, a bad sign, and don't let the fear of a few hard inquiries every couple years keep you from requesting a credit line increase to lower your Utilization if your payment history and general history with such accounts is very good, even more so if it's an older credit card account (vs. a store-specific account or one you have had for only a few years).  Every year or two, I ask most of my accounts to raise my credit limit unless they've automatically raised it without me asking, and given I have Very Good to Excellent credit and relatively high income, including perfect payment history and no derogatories, they almost always do.  I've lowered my Credit Utilization from over 50% to just over 10%. This also allows me to transfer balances easily with more 0% longer term options as one 0% promotion ends, without getting close to the credit limit.

Just don't open more than one or two new revolving credit accounts every two to three years if possible. Less is even better.  You want to have most of your lender accounts to be AT LEAST a decade old.  The younger you are, the harder that is, of course.  It's fine to open an account if it's really going to help your finances, even though it will lower your average account age and raise your hard inquiry count, because it will also increase your overall (gross) credit limit across all accounts which lowers your Credit Utilization, so the net effect is often positive.  But if you open more than one account every couple-few years, the net effect may not be positive because the other factors offset any Credit Utilization benefit.

Bottom line:  Do what makes sense to lower the interest you're paying/wasting, but beware of how such account and inquiry changes affect your score since too much of a good thing can be a bad thing, meaning opening a new account or seeking to raise credit limits can be really good to your net worth, but check your score regularly to see how such changes affect your scores before doing even more of such changes.

2 Contributions
2 People Helped

Helpful to 1 out of 1 people

how the hell do I actually submit the dispute!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

1 Contribution
1 Person Helped

Helpful to 1 out of 1 people

never applied for credit with Wells Fargo Bank 

Please remove this inquiry

Thanks,

Randy Perry

1 Contribution
1 Person Helped

Helpful to 1 out of 1 people

can you take this off credit report i did not do this

1 Contribution
1 Person Helped

Helpful to 1 out of 1 people

I got hit with  8 hard  inquiries  because I co-signed for a car loan for my daughter's husband!  He had no crediit history. My credit score dropped from 845 to 815.  Will it take 2 years to get back to where I was?

1 Contribution
113 People Helped

Helpful to 113 out of 143 people

I have 7 hard inquiries - all from the same auto dealership on the same day when I purchased a car last June.  I thought when one "event" did multiple checks looking for the best auto rate, it counted as one inquiry.  Is there anyway i can get that down to 'just" one ding?  Or do i have to wait it out for 2 years?   Thank you.   This service is awesome. 

Top Contributor

Reply by
danie828

68 Contributions
350 People Helped
Helpful to 155 out of 179 people

Repost: When buying a car, you will usually have your credit pulled at least twice. This practice is used by the dealer as a negotiating tool. 

1) DEALERSHIP runs your credit, usually pulls all 3, with scores. 

2) LENDER will then pull your credit AGAIN. Each lender the dealer submits to will probably also pull your report(s). 

There ARE rules in place to only show one inquiry on your report - but in my experience, since DEALERSHIPS are not auto lenders (as a general rule) .... you'll see one from the dealer and one from the lender. So if your report is submitted multiple times to multiple lenders, those will be multiple inquiries. If you KNOW your credit is a-tier, demand that the dealer not run your credit, and have them submit direct to the factory bank. Any time a lender pulls your credit report at your request to consider you for a loan, that inquiry will show up on your credit report and influence your credit score. The difference however is, if you are shopping around for a mortgage and apply at several places, the multiple loan applications won't hurt your credit score as long as the applications were made over a relatively short period of time.

Reply by
Freewaymc

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Helpful to 160 out of 186 people

I know this is a little older post, but people are still reading and there's some bad information about shopping for a car here.  I have owned and operated an auto dealership for 11 years and was a finance manager for 5 years prior to that.   You SHOULD let the dealership pull your credit and shop rates for you!  Most dealerships are indirect lenders for muliple banks, 10 or more at my dealership .. designed for every situation.  Depending on your score, credit profile, debt ratios, year of the car, mileage, loan to value, all these factors the banks look at.  By telling a dealership to not pull your credit, they are blind to which banks would be the most likely to give you a  loan at the best rates available for you.  The dealership may still shop 6 banks, but thats pretty unusual as most finance managers will know by experience which banks are likely to give you the best rate and shop only them.  The score you see from this site, or any other site you get your score from, will not be the same score potential lenders use.  When shopping for an auto loan, the lenders will use a specific scoring model base on auto lending worthiness.  AUTO ENHANCED BEACON, FICO AUTO 11, or similar.  Your score is not attached to your credit and is calculated by the information on your bureau every time it is pulled and is different depending on which type of score they pull.  The 'Hard Inquiries' are always there, but most scoring models will 'clump' inquries pulled within a short period (1 month). 

http://www.myfico.com/crediteducation/creditscores.aspx

You may be pre-approved at your local bank, say at 3.99%.. and the dealership could be sitting on banks that will roll out the same loan for 1.99%, saving you a ton of money.   And, YES, dealerships make money (reserve) for signing that loan.  It's called business. And like every business, this is another way that dealerships depend on making money to be profitable.  It's usually 1-3% of the loan, and there is flexibilty to write that loan at a small percentage higher or lower depending on what the dealerships standard margin is for writing loans.  The loan at 1.99% may have a 'buy rate' or '0 participation' at 1.49% and the dealership marks it up a small amount sat 1/2 percent to make 1 point (1%).. Making a profit and still saving the consumer money over what they may get by themselves. 

Unless your credit is absolutely impeccable, with no possible reason for denial, let the dealership pull your credit and do not let them send it to the banks blindly.  When we talk to the banks, they may ask about information on you credit file while they are deciding wether they are going to give the loan.. Finance managers need to be prepared for this.. If they see any red flags on your file or credit app , that's the time to address them, not while your on the phone with the lender fumbling around for an answer.

Don't let bad information cost you money.  Believe it or not, all reputable dealerships WILL get the BEST loan for you!

Reply by
goddessguru

1 Contribution
16 People Helped
Helpful to 16 out of 21 people

a reply years later i see.... however, if you didn't get this info already... re: your car purchase.  anything pulled within a 14 day span of your search for the car/and the lenders... counts as 1. it can be disputed at each of the 3 C.B.- somethimes they catch it... or maybe one company  will catch it and the others wont.- remember to dispute in writing. good luck

Reply by
joli2006

1 Contribution
0 People Helped

Did you get an answer on this? 

1 Contribution
1 Person Helped

Helpful to 1 out of 1 people

This page was about removing hard inquiries. I don't see anything about how to do it.

1 Contribution
165 People Helped

Helpful to 165 out of 205 people

this helped out alot and this site is #1 

Thanks for the love!

Review by
CK Moderator

Reply by
wcsnively

1 Contribution
10 People Helped
Helpful to 10 out of 34 people

all this bull**** to try to find anythign on the site makes it almost worthless

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