Hard Credit Check
It is becoming increasingly important for consumers to leverage every advantage they have to increase their credit score and decrease the cost of financing for credit cards, auto loans, and home loans.
Having a general idea of how credit scores are calculated and what affects the credit score will give you the information you need to help protect and improve your credit rating.
In this article, we will step through a series of informative questions and answers to help you save time and answer the questions you have about how credit inquiries affect your credit score, and how to shop for loans.
What is a Hard Pull Credit Check?
A hard pull credit check is a type of credit inquiry that lenders or creditors use to review your credit report in order to make a lending decision.
It's commonly used when applying for a mortgage, car loan, credit card, or other types of credit.
However, since these checks imply that you want to take on more credit, they can impact your credit score negatively.
How does a hard pull inquiry affect my credit score?
When a lender performs a hard credit inquiry, your credit score may drop by a small amount, typically around 5-10 points.
The effect will depend on your credit history and profile.
Hard credit inquiries make up 10% of your credit score and are included in the "new credit" category of the FICO scoring model.
How long will a hard credit inquiry stay on my credit report?
A hard credit inquiry stays on your credit report for 2 years, but its effect on your credit score decreases after the first year.
Usually, hard inquiries stop affecting your credit score after 12 months.
How can I check my credit without hurting my credit score?
To check your credit without affecting your score, you can request a "soft pull" or "soft inquiry".
This happens when you review your own credit report or when a lender pre-approves you for a loan or credit card.
Such inquiries don't affect your credit score and aren't visible to other lenders.
What is the "safe window" for hard credit checks?
The term "safe window" means that when you apply for the same type of loan within a certain period, usually 14 to 45 days depending on the credit scoring model used, it will count as a single inquiry for credit scoring purposes.
This way, you can look for the best loan offers without hurting your credit score with multiple hard inquiries.
Will multiple credit card hard credit pull inquiries hurt my credit score?
If you apply for multiple credit cards and have hard inquiries made on your credit report within a short time, it can damage your credit score.
This is because it may indicate to lenders that you are having financial problems or trying to borrow too much money.
Will multiple hard credit inquiries hurt my credit score?
Excluding credit card credit inquiries, you can apply for the same type of loan several times within a specific period between 15-45 days, and it will only count as one inquiry and not harm your credit score.
However, if you apply for different types of credit multiple times, it can lower your credit score.
How can I shop for a loan or mortgage without hurting my credit score?
If you want to shop for a loan or mortgage without negatively affecting your credit score, you can try using a loan comparison website or getting pre-approval from several lenders using soft credit inquiries.
This method will enable you to compare different offers without getting hard credit checks on your credit report.
How can I compare multiple mortgage loan offers without a hard credit check?
You could try using loan comparison websites that perform soft credit inquiries to pre-approve you and show you tailored loan options from different lenders.
This way, you can compare interest rates, terms, and fees without having to go through numerous hard credit checks.
Can I get pre-approved for a loan without a hard credit inquiry?
Yes, you can request a soft pull credit inquiry from the mortgage lender.
The information obtained from the soft credit inquiry will provide the mortgage lender with all the necessary information to render a reliable credit decision.
How much will my credit score drop with a hard credit check?
Your credit score may be affected differently by a hard credit check depending on your credit history and profile.
Generally, having one hard inquiry may decrease your credit score by around 5-10 points, but this effect is usually temporary and will weaken over time.
After 12 months, hard inquiries should no longer affect your credit score.
Summary of Hard Credit Inquires effects on credit score.
It is important for consumers to understand the difference between hard and soft credit inquiries in order to maintain a good credit score.
By knowing the safe period for shopping around for rates and how to compare loan offers without multiple hard inquiries, you can make wise choices that safeguard your credit score and help you obtain the best financial products for your needs.
