A single hard inquiry will drop your score by no more than five points. Often no points are subtracted. However, multiple hard inquiries can deplete your score by as much as 10 points each time they happen.
Since hard inquiries affect your credit score and what is found may even affect approval, you might be wondering: How many inquiries is too many? The answer differs from lender to lender, but most consider six total inquiries on a report at one time to be too many to gain approval for an additional credit card or loan.
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.
The most likely reasons are: your balances increased, you recently closed accounts, you applied for new lines of credit, or there is inaccurate or fraudulent information on your account. If your credit score dropped by 40 points, this is likely due to late payments that continue to compound on past-due bills.
In general, credit inquiries have a small impact on your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores. For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history.
For many lenders, six inquiries are too many to be approved for a loan or bank card. Even if you have multiple hard inquiries on your report in a short period, you may not see negative consequences if you're shopping for a specific type of loan.
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®.
Missed bill payments, high credit utilization, bankruptcy, and a number of other factors can cause your credit score to drop.
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U.S. reached 714.
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.
Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year.
A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable. If you want to get the best credit cards, mortgages and competitive loan rates — which can save you money over time — excellent credit can help you qualify.
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.
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.
Credit score required: 620
Conventional loans are the most common type of mortgage, accounting for about 70% of the market. They usually require a 620 credit score, though some lenders will consider applicants with scores as low as 580.
The most likely possible reasons for your credit score dropping after paying off debt are a decrease in the average age of your accounts, a change in the types of credit you have or an increase in your credit utilization.
Pay bills on time
Making payments on time to your lenders and creditors is one of the biggest contributing factors to your credit scores—making up 35% of a FICO Score calculation. Past problems like missed or late payments are not easily fixed.
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
The lowest score you can get with either model is 300, though past scoring models have gone lower (and aren't used so much today). According to FICO, an estimated 11.1% of Americans have a FICO score ranging between 300 and 549 as of 2019.
VantageScore models look at multiple hard inquiries a bit differently. “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.”
There are two types of credit score inquiries lenders and others (like yourself or your landlord) can make on your credit score: a "hard inquiry" and a "soft inquiry." The difference between the two is that a soft inquiry won't affect your score, but a hard inquiry can shave off some points.
There is no set maximum amount that your credit score can increase by in one month. It all depends on your unique situation and the specific actions you're taking to improve your credit. Realistically, you probably won't see your credit score increase by more than 10 points in a month.