How many points do you lose when credit is pulled?

Impact of Credit Inquiries on Credit Scores

When you apply for credit, lenders will typically pull your credit report to assess your creditworthiness. This is known as a “hard inquiry” and can temporarily affect your credit score. The impact of a hard credit inquiry varies depending on your credit history and the type of inquiry.

Hard Inquiries vs. Soft Inquiries

There are two main types of credit inquiries:

• Hard inquiries: These are made when you apply for new credit, such as a loan or credit card. Hard inquiries remain on your credit report for two years and can impact your score.
• Soft inquiries: These are made when you check your own credit report or when lenders pre-approve you for offers without you applying. Soft inquiries do not affect your credit score.

Impact of Hard Inquiries on Credit Scores

According to FICO, the most widely used credit scoring model, a single hard credit inquiry typically results in a drop of around five points. This drop is usually temporary and your score will gradually recover over time.

However, the impact of a hard inquiry can vary depending on your overall credit history. If you have a strong credit history and high credit score, the drop may be less significant. Conversely, if you have a poor credit history, the drop may be more substantial.

Mitigating the Impact of Hard Inquiries

There are a few strategies you can use to mitigate the impact of hard credit inquiries on your score:

• Avoid applying for multiple loans or credit cards in a short period of time. Each hard inquiry will temporarily affect your score.
• Consider getting pre-approved for offers instead of applying. Pre-approvals typically use soft inquiries, which do not impact your score.
• Monitor your credit reports regularly. Check your credit reports at least once a year to identify any unauthorized hard inquiries.

In conclusion, while hard credit inquiries can temporarily impact your credit score, the drop is typically minimal and short-lived. By understanding how hard inquiries work and taking steps to mitigate their impact, you can maintain a strong credit score and access the credit you need.