Definition of Hard Inquiry

A hard inquiry is a lender requesting your credit report from a credit agency. When you apply for a loan or other credit, hard inquiries might temporarily lower your credit score. Other terms for hard inquiries include “hard pull” and “hard credit check.”

How Hard Inquiries Work

Lenders usually require a copy of your credit report from Equifax, Experian, or TransUnion when applying for a loan, credit line, or credit card.

Credit bureaus get information from current and former debtors. Credit reports differ between bureaus since not all creditors report to all three (and some don’t). For significant loans like mortgages, the lender may request all three reports before deciding to obtain a comprehensive picture of you.

Such demands are challenging inquiries.

Your credit score will drop somewhat after every severe credit inquiry. Hard inquiries stay on your credit record for two years but don’t affect your score after one.

Some lenders may think you need money badly if you receive several hard inquiries quickly. Credit scores may decline significantly.

Some lenders and credit scoring algorithms offer exceptions. Many FICO credit scores are unaffected by many queries from car, mortgage, or student loan lenders in a short time. These usually count as one query and don’t affect credit ratings, “FICO warns.

FICO has numerous scoring algorithms, and the current ones use 45 days as a “short period of time.”

“As long as the last credit check is within 45 days of the first, no matter how many lenders you consult, your credit is the same,” says the CFPB. Even if a lender checks your credit after 45 days, shopping around is typically worth it. An additional inquiry has little influence, but looking around for the best bargain may save you a lot of money.”

FICO claims its scoring models overlook mortgage, car, and student loan inquiries “initiated 30 days prior to scoring. If you find a loan within 30 days, queries won’t damage your scores while rate browsing.”

These exclusions exist because you are likely seeking one loan at the best conditions, not many.

Soft credit inquiries do not affect your score.

Hard vs. Soft Inquiry

In addition to complex inquiries, lenders and other organizations can also seek credit reports through soft inquiries. Soft inquiries do not result from credit applications. It may happen without your knowledge.

An example of mild inquiries: present creditors requesting your file or potential lenders prescreening for credit card offers. Requesting your credit report is also a soft inquiry.

Soft inquiries include employer or potential employer credit report queries. You will probably know about it since employers must acquire your written consent beforehand.

Soft inquiries do not affect credit scores. They can appear on your credit record, but only you can see them, says TransUnion.

Extra Information Lenders May Request

Your credit report provides much information about your credit use but doesn’t tell potential lenders or other interested parties anything about your finances.

Not included: income. It does not include investment or bank account information. To get that information, a lender will have to ask questions on your loan application and seek pay stubs, tax forms, investment statements, and bank statements.

Your marital status, education, and medical history are also missing from credit reports.

Lenders and others must acquire your credit score separately from your credit record.

Who Can Get Your Credit Report?

The Fair Credit Reporting Act controls credit report access. The Consumer Financial Protection Bureau states, “A consumer reporting agency may provide information about you only to people with a valid need—usually to consider an application with a creditor, insurer, employer, landlord, or other business.” Employers usually need written consent.

How do I get a credit report?

By law, each of the three leading credit agencies must provide you with a free credit report once a year. Three have official websites: AnnualCreditReport.com. You can dispute credit report inaccuracies with the credit bureau, especially those that could hurt your score. It must investigate and report its results.

How do I avoid prescreening?

OptOutPrescreen.com lets you stop credit card and insurance prescreening for privacy or to reduce unwanted mail.

What’s a credit freeze?

Credit freezes prevent other parties from viewing your credit record, with limited exceptions. Free credit freezes are available by contacting each credit agency independently.

Bottom Line

Hard inquiries occur when a lender asks for your credit report for a loan or other credit. Hard inquiries can lower your credit score, but the effect is generally minimal and transitory, so don’t let it stop you from asking for credit when you need it.

Conclusion

• Hard inquiries occur when a lender asks for your credit report after you’ve applied for credit.
• Complex queries might temporarily lower your credit score.
• Lenders or other businesses pull your credit record independently using soft inquiries.