Every time your credit score is checked, it is recorded and becomes part of your credit history.
However, only “hard inquiries” of your credit have an impact on your credit score. So, you may ask how long do hard inquiries stay on a credit report?
Difference between hard and soft inquiries
There are two types of credit inquiries: hard and soft. A hard inquiry take place when a prospective lender looks at your credit report to determine whether you are a credit risk. Hard inquiries occur when you apply for a mortgage, auto loan, credit card or other type of consumer or business loan.
A soft inquiry occurs when a person or company checks your credit report as part of a general background check. For example, it would be considered a soft inquiry if you were to check your own credit report, or if a mortgage lender “preapproved” you for a loan rather than conducted a full loan approval process.
There may be occasions when you check your credit report and notice that there have been soft inquiries that occurred without your permission. Don’t worry about these inquiries because they don’t impact your credit score.
How long an inquiry impacts your credit score
Hard inquiries stay on your credit report for two years. However, a hard inquiry only influences your credit score for one year. After that year, it has no impact on your score.
Credit scores from Fair Isaac Corp., or FICO, the primary credit scoring company, range from 300 (bad) to 850 (excellent). To put the impact of a hard inquiry in perspective, you likely would lose fewer than five points following a hard inquiry. How many points you actually lose depends on these factors:
- The number of accounts you have opened recently and the type of accounts they are.
- How many recent credit inquiries you have had.
- How much time as elapsed since you opened your last account.
- How much time has gone by since your last credit inquiry.
To keep you from losing point when hard inquiries are made, keep them all within a 45-day period. FICO considers all inquiries within 45 days of each other — whether it’s for an auto loan, mortgage or student loan — as a single inquiry.
To get a student loan, mortgage, credit card, car loan or business loan, your credit will be checked. The number of points it costs your overall credit score is the trade-off you make, but one that is necessary to build your life.
Of all the factors that go into affecting your credit score, the one that is least damaging is the number of inquiries you have on your credit report.
That said, be judicious when applying for loans, and only borrow money when you need it.