How do credit inquiries affect my credit score?

by althea_dooley , in category: Banking and Credit , a year ago

How do credit inquiries affect my credit score?

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1 answer

by paolo.leuschke , a year ago


Credit inquiries can affect your credit score, but the impact is usually minor and temporary. There are two types of credit inquiries: soft inquiries and hard inquiries.

  1. Soft inquiries: These occur when you check your own credit report or when a company checks your credit for promotional purposes, such as pre-approved offers. Soft inquiries do not affect your credit score.
  2. Hard inquiries: These occur when you apply for new credit, such as a loan or credit card. Hard inquiries can have a small negative impact on your credit score, usually lowering it by a few points. The impact is temporary and typically lasts for about two years.

Multiple hard inquiries within a short period can signal to lenders that you are seeking credit and may represent a higher credit risk. However, the credit scoring models differentiate between rate shopping for a single loan (e.g., mortgage or auto loan) versus shopping for multiple loans (e.g., multiple credit cards). For rate shopping, multiple inquiries within a 14 to 45-day period (depending on the scoring model) are generally counted as a single inquiry.

It's important to note that the impact of credit inquiries on your credit score is typically outweighed by other factors, such as your payment history and credit utilization.