A hard inquiry typically lowers your credit score by fewer than five points under FICO scoring models, although the impact can vary depending on your credit history and scoring model. Some people may experience a slightly larger decrease, while others may see no change at all.
A hard inquiry happens when a lender checks your credit report after you apply for a loan, credit card, or another form of credit. Although the effect is generally small and temporary, understanding how credit inquiries work is particularly important when preparing for a mortgage or another major loan application.
What is a Hard Credit Inquiry?
A hard credit inquiry, also called a hard pull or hard credit check, occurs when a lender requests your credit report to evaluate your eligibility for a financial product.
It generally happens after you submit a formal credit application or authorize a lender to review your credit as part of the application process.
Common situations that result in hard inquiries include:
Applying for a mortgage or home loan.
Applying for a new credit card.
Financing a car or other vehicle.
Applying for a personal loan.
Requesting certain types of credit limit increases.
How Much Does a Hard Inquiry Lower Your Credit Score?
According to Experian, a new hard inquiry typically reduces a FICO Score by fewer than five points, while the impact on VantageScore models can be around five to 10 points. However, the actual effect varies depending on your credit history and the scoring model used.
The effect may differ depending on your circumstances:
Strong credit history: A single inquiry may have little or no noticeable impact.
Limited credit history: The effect of a new inquiry may vary more when there is less established credit information available to calculate a score.
Several recent applications: Multiple unrelated hard inquiries can indicate increased demand for new credit and may cause a greater decrease.
Hard inquiries are only one factor in credit scoring. Payment history, credit utilization, length of credit history, and the overall mix of credit accounts also influence your score.
Expert Tip: At Convoy Home Loans, we understand that protecting your credit score is important when preparing for a mortgage. As a licensed mortgage broker working with multiple wholesale lenders, we help borrowers understand the mortgage application process, explore available loan options, and know what to expect before moving forward.
Hard Inquiry vs. Soft Inquiry
Not every credit check affects your credit score. The difference between a hard inquiry and a soft inquiry is the purpose of the credit check.
Checking your own credit score or reviewing your credit report does not create a score-reducing hard inquiry. You can monitor your credit before applying for a loan without worrying about lowering your score.
How Long Do Hard Inquiries Stay on Credit Report?
A hard inquiry can remain on your credit report for up to two years from the date it occurs. However, remaining on your report does not mean it will continue affecting your credit score for the entire period.
Under FICO scoring models, hard inquiries generally affect your score for 12 months. VantageScore models may consider inquiries for a longer period, depending on the scoring version.
The distinction is important:
First few months: The inquiry may have a small negative effect on your score.
After 12 months: FICO Scores no longer consider that inquiry.
After 24 months: The inquiry generally disappears from your credit report.
Related Articles:
How to Improve Your Credit Score Before Applying for a Mortgage
How to Get Pre-Approved for a Mortgage and Why It’s Essential
What Is Rapid Rescore and How Does It Work?
Do Multiple Hard Inquiries Affect Credit Score?
Yes, multiple hard inquiries can lower your credit score, particularly when they come from applications for different types of credit. However, credit scoring models recognize that borrowers often compare offers before choosing a mortgage, auto loan, or student loan. This is known as rate shopping.
Instead of counting every qualifying inquiry separately, credit scoring models may treat multiple inquiries for the same type of loan as a single inquiry when they occur within the applicable rate-shopping window.
How the Mortgage Rate-Shopping Window Works
Mortgage rate-shopping rules allow qualifying credit inquiries made within a specified period to be grouped together when calculating your credit score. This means comparing mortgage offers from different lenders does not necessarily result in a separate scoring penalty for every credit check.
The applicable period depends on the scoring model:
Newer FICO scoring models: Generally group qualifying mortgage inquiries made within a 45-day window.
Older FICO scoring models: May use a 14-day window.
VantageScore models: Generally use a 14-day rate-shopping period.
For example, if you submit mortgage applications to three lenders within the applicable window, qualifying inquiries are generally grouped together for scoring purposes. However, they may still appear as separate entries on your credit report.
It is sensible to complete mortgage rate comparisons within 14 days when possible. This provides a more conservative approach if a lender uses an older scoring model.
How to Minimise the Impact of Hard Inquiries Before Applying for a Mortgage
If you are planning to purchase a home, managing new credit applications can help protect your credit profile during the mortgage process.
Consider these practical steps:
Check your credit report early: Review your credit history for incorrect information, unfamiliar accounts, and unauthorised inquiries before applying.
Avoid unnecessary credit applications: Hold off on applying for new credit cards, personal loans, or auto financing while preparing for a mortgage.
Avoid opening new credit accounts: Refrain from applying for additional credit cards or loans before or during the mortgage application process unless necessary.
Maintain existing accounts responsibly: Make payments on time and keep credit card balances manageable.
Avoid major financial changes: Opening new accounts or taking on additional debt during the mortgage process can affect your financial profile and loan eligibility.
Ask before authorising a credit check: Confirm whether the lender will perform a hard or soft inquiry and when the check will take place.
These steps cannot guarantee that your credit score will remain unchanged, but they can help you avoid unnecessary credit-related activity.
Compare Mortgage Options Without Unnecessary Credit Inquiries
Borrowers preparing for a mortgage may hesitate to compare loan options because they are concerned about the effect of multiple credit checks. Understanding how mortgage inquiries are treated by credit scoring models can help them approach the comparison process more confidently.
Working with an experienced mortgage broker can simplify the process by helping borrowers understand lender requirements, assess their eligibility, and identify financing options that align with their financial situation and homeownership goals.
Convoy Home Loans helps borrowers make more informed decisions throughout the mortgage process. When preparing to apply for a mortgage, you can discuss your financing needs, available loan options, and the credit-check process before proceeding.
Keep in mind that the treatment of credit inquiries depends on the scoring model and timing of the credit checks.
Frequently Asked Questions
Q1. Can a Hard Inquiry Cause a Mortgage Application to Be Denied?
A single hard inquiry is unlikely to cause a mortgage application to be denied on its own. However, lenders consider your overall credit profile, including payment history, outstanding debts, credit utilization, and recent credit applications when evaluating your eligibility.
Q2. Can You Dispute a Hard Inquiry You Did Not Authorize?
Yes. If you find a hard inquiry you do not recognize or did not authorize, you can dispute it with the credit bureau reporting it. You may also contact the company that requested the inquiry to verify its origin. If the inquiry resulted from identity theft, consider placing a fraud alert or credit freeze.
Q3. Do Hard Inquiries Affect Your Ability to Get a Lower Mortgage Interest Rate?
A hard inquiry does not directly determine your mortgage interest rate. However, if it contributes to a lower credit score, it could affect the loan terms or rates available to you. Lenders also consider other factors, including your debt-to-income ratio, down payment, loan type, and overall financial profile.
