Credit Inquiries 101

A “credit inquiry” is essentially a notice on your credit report that documents your attempt(s) to apply for some type of new credit, whether it be a mortgage, auto loan, or credit card. Credit inquiries show up on your credit report (whether you get approved or not) so other creditors can determine if you’ve been trying to secure new lines of credit, which research determines can lead to future credit risk.

With regard to Fico scoring, about 10 percent of the score is based on new credit, which includes credit inquiries. So it is important to apply for new credit sparingly to ensure you don’t cause unnecessary harm to your rather precious credit score.

When you see the notice “too many credit inquiries” on your credit report, it means you exceeded that magical limit of credit pulls within a certain time period, and as a result, will see your credit score lose points.

This magic limit is unknown and also dependent on your overall credit profile and credit history, but it is believed that more than 4 credit pulls within six months is typically synonymous with the greatest credit risk, and a steep decline in your credit score will surely follow.

How Long Do Inquiries Stay on Credit Reports?

A reader once asked me, “Do credit inquiries ever go away?” Although there seems to be much dispute about this, credit inquiries only remain on your credit report for two years, but FICO scores only factor in inquiries as part of their scoring methodology for the previous 12 months.

In other words, even if they are present on your credit report, they’re only meaningful from a credit-scoring perspective for a single year. The rest of the time they just serve as additional information to you and your creditors.

Additionally, Fair Isaac, the founder of the FICO score, has improved its scoring model to distinguish rate shopping versus a consumer attempting to open a large number of accounts. The latter would probably see their credit score drop because a series of new credit accounts tends to lead to greater credit risk.

But a consumer with multiple inquiries related to the same type of loan within a 14-45 day shopping period will generally see no adverse effect to their credit score, as only one inquiry should be counted.

In fact, auto, mortgage, and student loan inquiries that occur 30 days prior to scoring don’t affect your Fico score, and all such inquiries that occur within a 45-day window are treated as a single inquiry (this isn’t a mix an match deal though…)

For example, think of a person that shops with multiple lenders to obtain a home loan. Fico knows it can be a long process, and doesn’t want to discourage consumers from comparison shopping, so they won’t count all those inquiries against you.

How Credit Inquiries Can Hurt Your Credit Score

As alluded to above, a credit inquiry can lower your credit score, but the impact is generally rather inconsequential.

Typically, a single credit inquiry will take less than five points off your credit score, but this can range depending upon the type of inquiry and the overall makeup of your credit profile. If you have a limited credit history, one inquiry will have a greater impact than a consumer with a solid 10-year credit profile.

But a large number of different types of inquiries in a short time period can be a red flag for potential creditors, and could result in noticeably lower credit score. And even if you do have a good credit score, a large number of inquires in a short time span could cause a creditor to decline your application for fear that you’re getting in over your head.

That said, don’t fret too much about pulling your own credit report every now and then, as not all credit inquiries count against you. If you order a credit report online from any of those “free credit report” sites, it won’t be factored into your score because it’s not an application for credit.

It’s simply a check-up, and doesn’t signal a greater credit risk for the consumer. Same goes for employee credit pulls and pre-approved credit offers. As a rule of thumb, if the credit pull doesn’t involve new credit, it shouldn’t affect your credit score (does a credit check lower your credit score?).

Hard Pull vs. Soft Pull

You may have heard the term “hard pull” and “soft pull.”

A “hard pull” refers to credit inquiries that actually affect your credit score, those which are initiated by the consumer and involve new credit. Try to keep these to a minimum, and definitely avoid them before shopping for a home loan.

A “soft pull,” on the other hand, is innocuous, and includes credit reports you pull yourself, or those pulled by an employer or an insurance company. These are harmless and won’t do anything to hurt you or your credit.

In conclusion, you shouldn’t worry too much about the effect of credit inquiries. Things like paying bills on time and keeping your existing balances low are much more important, and impact your credit score a lot more. As long as you practice moderation, you should enjoy a solid credit score.

Tip: Review the credit inquiries on your credit report to ensure you recognize them all. If you see anything that doesn’t look familiar, you could be the victim of identity theft. If you suspect anything, contact the creditor you don’t recognize for further information.


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