Credit reports are essential tools that lenders use to assess your creditworthiness. A key component of these reports is credit inquiries. Understanding how different types of inquiries affect your credit score is crucial for maintaining a healthy financial profile. One common question people have is: how long do hard inquiries actually stay on your credit report and impact your credit score? Let’s dive into the details.
Hard inquiries, also known as “hard pulls” or “credit checks,” occur when you apply for new credit. This could be for a credit card, a loan (like a mortgage, auto loan, or personal loan), or even when you apply for an apartment or certain services. These inquiries signal to lenders that you are seeking new credit, and they play a role in calculating your credit score.
When you apply for credit, the lender requests your credit report from one or more of the major credit bureaus: Experian, Equifax, and TransUnion. This request is recorded as a hard inquiry on your credit report. It’s important to note that hard inquiries can slightly lower your credit score, especially if you accumulate multiple inquiries in a short period. However, the impact is generally small and temporary for most people.
The good news is that hard inquiries do not linger on your credit report forever. Generally, hard inquiries stay on your credit report for two years from the inquiry date. However, their impact on your credit score is even shorter. Most scoring models, like FICO and VantageScore, only consider hard inquiries for credit scoring purposes for one year. After 12 months, the inquiry will still be visible on your report, but it will no longer factor into your credit score calculation.
Here’s a more detailed breakdown of the timeline:
- Initial Impact (0-3 months): When a hard inquiry is first added to your credit report, it may have a small, negative impact on your credit score. The exact decrease varies depending on your overall credit profile, but it’s usually just a few points.
- Diminishing Impact (3-12 months): The effect of a hard inquiry on your credit score diminishes significantly over time. After about three months, the impact becomes minimal. By the time a year has passed, the inquiry is unlikely to be affecting your score at all.
- Visible but Not Impactful (12-24 months): The hard inquiry remains on your credit report for a full two years. While it’s still visible to anyone who pulls your credit report, it is no longer considered in most credit score calculations after one year.
- After 24 Months: Hard inquiries automatically fall off your credit report after two years. They are no longer visible to lenders or anyone else reviewing your credit history.
It’s also important to differentiate hard inquiries from soft inquiries. Soft inquiries, sometimes called “soft pulls,” occur when you check your own credit report, when lenders pre-approve you for offers, or when businesses check your credit for background checks (like employers). Soft inquiries do not affect your credit score and can stay on your report for around two years as well, but they are not a negative factor.
To summarize, while hard inquiries are a normal part of applying for credit and can slightly ding your credit score temporarily, they are not a long-term concern. They stay on your credit report for two years but primarily impact your score for only the first year. Understanding this timeline can help you manage your credit applications strategically and maintain a good credit standing. Regularly reviewing your credit report can also help you keep track of any inquiries and ensure their accuracy.
