After that, wait a minimum of six months between credit card applications so that you have time to improve your credit before a new hard inquiry appears on your credit report. Before or during the mortgage application process: When you apply for a mortgage, lenders look closely at your debt-to-income ratio (DTI).
The good news is that the majority of credit scoring models will lump multiple inquiries for one loan type together and treat them as a single inquiry if they're made within a short period of time. For FICO, this window is 45 days; VantageScore uses a 14-day period.
Bottomline: The Type of Inquiry May Affect Your Credit Score
A single hard inquiry will go mostly unnoticed by the credit bureaus. Any “damage” done will mend itself in a couple months. However, if you make too many hard inquiries in a short enough period of time, your credit score will drop, possibly significantly.
Having too many hard inquiries can hurt your credit score and potentially make it harder for you to get approved for a credit card. For example, if you apply for multiple credit cards within a short period of time, this may appear as a red flag for the issuer.
There's no such thing as “too many” hard credit inquiries, but multiple applications for new credit accounts within a short time frame could point to a risky borrower. Rate shopping for a particular loan, however, may be treated as a single inquiry and have minimal impact on your creditworthiness.
In general, six or more hard inquiries are often seen as too many. Based on the data, this number corresponds to being eight times more likely than average to declare bankruptcy. This heightened credit risk can damage a person's credit options and lower one's credit score.
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.
If you find an unauthorized or inaccurate hard inquiry, you can file a dispute letter and request that the bureau remove it from your report. The consumer credit bureaus must investigate dispute requests unless they determine your dispute is frivolous.
How do hard inquiries impact your credit score? A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases the damage probably won't be that significant. As FICO explains: “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Many borrowers wonder how many times their credit will be pulled when applying for a home loan. While the number of credit checks for a mortgage can vary depending on the situation, most lenders will check your credit up to three times during the application process.
Too many credit inquiries on your credit report can make you appear riskier to lenders which can reduce your chances of getting approved for new credit. While different lenders may have varying criteria for what they deem as “too many,” you should try to keep the number of inquiries under six.
Multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer, as it suggests you may be short on cash or getting ready to rack up a lot of debt. So consider spreading out your credit card applications.
Bottom line. Generally, it's a good idea to wait about six months between credit card applications. Since applying for a new credit card will result in a slight reduction to your credit score, multiple inquiries could lead to a significantly decrease.
“Any hard inquiries that occur within 14 days of each other are considered one inquiry for scoring purposes,” Ulzheimer says. “This includes credit card, mortgage, auto, student loan and any other hard inquiries.”
You recently applied for credit
If you applied for a credit card or are shopping around for a loan, a hard inquiry can appear on your credit report, which temporarily lower a score.
How does a hard inquiry affect credit? While a hard inquiry does impact your credit scores, it typically only causes them to drop by about five points, according to credit-scoring company FICO®.
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
Contrary to popular belief, checking your own credit score won't lower it. That said, hard inquiries can lower your credit score. If hard inquiries occur without your consent, the Fair Credit Reporting Act allows you to remove those inquiries through a dispute.
Disputing hard inquiries on your credit report involves working with the credit reporting agencies and possibly the creditor that made the inquiry. Hard inquiries can't be removed, however, unless they're the result of identity theft. Otherwise, they'll have to fall off naturally, which happens after two years.
Missed bill payments, high credit utilization, bankruptcy, and a number of other factors can cause your credit score to drop.
In some cases, as seen in an example below, Credit Karma may be off by 20 to 25 points.