How much does an inquiry affect your credit score?
Whenever you apply for a loan or credit card, the lender usually checks your credit report. It is called a credit inquiry. These are two types: soft inquiries and hard inquiries.
Soft inquiries (like when you check your own credit score or get prequalified offers) do not impact your score at all. Therefore, you do not need to worry about those.
Hard inquiries, on the other hand, can cause a small, temporary drop in your credit score, even if you do not end up taking the loan or card.
Hard inquiries can remain on your credit report for up to two years, but their impact on your credit score typically diminishes after about a year. If you have a solid credit history, one or two hard inquiries usually won’t significantly affect your score.
However, having too many hard inquiries in a short period can raise concerns for lenders. It may give the impression that you are desperate for credit or taking on excessive debt, which could hurt your chances of being approved for new credit. Here is how I manage hard inquiries to protect my credit score:
- I avoid applying for multiple loans or cards at the same time.
- Instead of applying for credit cards directly, I check for pre-approved offers through mobile apps.
- I regularly monitor my credit report to keep track of how many inquiries are showing up.
Hard inquiries can affect your score, but not by much and not for long. Just be selective about what you apply for and keep making your payments on time.