Hard Inquiry

Hard inquiry summary:

• When you apply for credit and a company pulls your credit report, this results in a hard inquiry on your credit file.

• In most cases, any third party that wants to check your credit must get your permission first.

• A hard inquiry typically lowers your credit score by a small amount. Hard inquiries stop affecting your score after one year, and fall off your credit history in two years.

Hard Inquiry Definition and Meaning

A hard inquiry occurs when a third party, such as a lender, requests to view your credit report, usually because you’ve applied for credit and given your permission to do a credit check. The request gets recorded on your credit history and typically causes a small drop in your credit score.

Key Aspects of a Hard Inquiry

When you apply for credit, lenders usually want to see your credit report first. Your credit report provides your track record of borrowing and paying back money, including your payment history on loans and credit cards.

For the most part, companies can only get your credit report with your authorization because of the Fair Credit Reporting Act (FCRA). The law allows for limited exceptions, such as in response to a court order, but these are few and far between.

If you give your authorization, then the company can request your credit report from one or more of the three major credit bureaus. The request for your credit report is known as a hard inquiry, a hard pull, or a hard credit check, and is recorded on your credit history.

The other type of credit inquiry is a soft inquiry. Unlike a hard inquiry, a soft inquiry doesn’t require your permission and doesn’t impact your credit score.

How Hard Inquiries Affect Your Credit Score

Hard inquiries have a small negative impact on your credit score. A single hard inquiry normally takes fewer than five points off of a person’s FICO® Score (the type of credit score most widely used by lenders), according to Experian, one of the three credit bureaus.

The impact to your credit score doesn’t last too long. Hard inquiries only affect your FICO® Score for up to one year, and the effect diminishes over that time. They fall off your credit report entirely in two years.

Multiple hard inquiries could add up to a larger decrease in your credit score. However, most credit scoring systems provide a little flexibility for consumers who are rate shopping for loans. If you have multiple hard inquiries for mortgages, auto loans, or student loans within a short time period, they’re all grouped together and counted as a single inquiry. The time period ranges from 14 to 45 days, depending on which kind of credit score is being calculated. 

That flexibility doesn’t apply with credit card applications. In most cases, credit card applications are counted as separate hard inquiries, even if the applications all happen within a short time period.

Who Makes Hard Inquiries?

Any party with a valid reason to check your credit can make a hard inquiry if it has your permission. Here are some of the most common examples:

• Credit card companies

• Lenders

• Landlords and property management companies

• Employers

• Utility companies

• Wireless carriers

Information Provided From a Hard Inquiry

After a hard inquiry, the company gets a copy of your credit report. Your credit report has personal and financial information, including your:

• Full name

• Current and past addresses

• Credit accounts (credit cards, loans, and lines of credit)

• Payment history on credit accounts

• Defaults

• Bankruptcies

Not all companies get your entire credit report. For example, companies that run credit checks for employment only see a shortened version of your credit report.

A credit report doesn’t have all your financial information. There’s no data on your income, bank account balances, or retirement savings. Your credit report also doesn’t have your credit score, although some companies obtain your credit score during a credit check.