We talked in this column recently about removing negative items from your credit report. I told you then that removing accurate and timely negative information from your report is generally not possible.

But does that include hard inquiries? While not technically a negative item (you did nothing wrong) they do indicate potential increased risk and can count against you. Let’s examine inquiries a little closer and see how they affect both your credit reports and your credit score.

What is a hard inquiry?

First, let’s define “inquiry” and how it’s used in credit reporting. There are two types of inquiries, which are sometimes referred to as “pulls”: soft and hard.

A soft inquiry or pull occurs when you check your credit for yourself. Preapproved offers of credit are also soft pulls because you are only preapproved for the offer, not the credit. A soft pull will appear on your credit report, but will only be visible to you. More importantly, a soft inquiry has no effect on your credit score because no additional credit was asked for or offered.

However, a hard inquiry or pull is a different animal altogether. The difference between the two stems from the intent of the inquiry. Sort of like kissing your sister or kissing your sweetie! Both are kisses, but the intent is different.

Hard pulls happen anytime you apply for credit and they will affect your credit whether you are approved or not. In addition, hard inquiries will appear on your credit report and be visible to anyone who checks your credit. They will have a negative impact on your score, but the impact is relatively minor (about five points for one inquiry, according to FICO).

How long does it stay on your credit report?

Inquiries remain on your credit reports for two years. However, the effect of the inquiry is only felt for one year at most. And usually the impact is gone after a few months. The impact is generally greater for someone with little data on their credit report than for someone who has an average or extensive history using credit.

How does a hard inquiry affect your credit score?

Credit scoring is all about your risk of defaulting on a loan and the calculation of risk taken by a lender to extend you credit. Hard inquiries send a signal that you are looking to take on new credit obligations.

One inquiry, as noted above, will only ding your score about five points. However, if you do something like apply for every credit card out there, you will find that your score will be more dramatically impacted. That’s because when you ask for new credit you are changing the status quo.

Questions like why do you want or need more credit, can you handle additional debt or what has changed in your life that you need new credit all create uncertainty. Adding new accounts changes the overall picture and your score will reflect new uncertainty until you have had the accounts long enough to show you can handle them. Your credit report is the indicator of how you handle the new credit you have been extended. If you manage it well, your report will reflect that and your score will reflect the reduced risk.

Is it possible to remove a hard inquiry?

I started this column out by saying that removing accurate and timely information from your report is generally not possible. This is true for hard inquiries as well. If you did apply for credit—again, whether or not you were approved—those inquiries will show up on your credit report and affect your credit score.

However, there is one big fat exception to this: identity theft. In the case of identity theft—where someone else applied for credit in your name without your knowledge or approval—those inquiries can and should be removed.

This can be a detailed process, but the Federal Trade Commission has listed out the necessary steps here. As with all disputes, keep good records and in the case of identity theft, be sure to get a police report documenting the theft.

How to minimize credit score damage from hard inquiries

As I mentioned earlier, you should avoid making several inquiries in a short period of time—unless you are shopping for a student loan, a mortgage or car loan. The credit scoring algorithms take into account that people tend to rate shop for these purchases. In these instances, as long as you keep the inquiries within a certain time window, they will only count as one in your score calculation.

The elves at FICO look at your credit report for rate-shopping inquiries. If they find some, they will consider inquiries that fall in a typical shopping period as just one inquiry. Older versions of the FICO score use a shopping period of 14 days. Newer versions use a shopping period of 45 days.

Each lender may use a different version of the FICO scoring formula to calculate your FICO scores. VantageScore 3.0 counts all car or mortgage loan inquiries made within a 14-day period as just one inquiry on your credit report. They will all show up on your credit report, but they will be grouped all together for the purpose of calculating your score.

As with all things credit-score related, there are tried-and-true methods for minimizing damage when your score has been negatively affected in any way:

  • First and foremost, pay your bills—all of your bills—on time, each and every time.
  • Keep an eye on your credit card usage and try to keep your balances at less than 25 percent of your overall total credit limit(s). Only apply for credit when you need it and only when you are fairly certain that you will be accepted.
  • Monitor your credit reports and report anything suspicious or that you don’t recognize.
  • Don’t close accounts without good reason; even though a credit card is paid off, keeping it open can help you by increasing your credit available (and thereby lowering your credit utilization ratio) and lengthening your credit history.

Bottom line

Finally, don’t get too caught up in worrying about the hard pulls. Remember that these inquiries are a part of normal credit use and will naturally fall off of your credit report after two years without any action necessary on your part.

Have a credit scoring question for Steve? Drop him a line at the Ask Bankrate Experts page!