How long do hard inquiries stay on your credit report?
Typically, hard inquiries will stay on your credit report for 24 months (2 years). However, hard pulls generally stop affecting your credit score after 12 months (1 year).
Keep reading to learn more.
Credit is important. From applying for a loan to renting an apartment, your credit score will be a major factor as lenders use it to determine whether you are a reliable borrower.
As a business owner, in particular, having a good credit score can help you get approved for business loans, credit cards, and other lines of credit.
One thing that can have a major impact on your credit score is a hard inquiry. Hard inquiries are necessary when applying for credit, but they can hurt your credit score if you aren’t careful.
So, what is a hard pull, and why does it affect your credit score? How long do hard inquiries stay on your credit report? Let’s see it next.
Understanding the Difference Between Hard Pull & Soft Pull
Before getting an in-depth answer to the question “how long do hard inquiries stay on your credit report?” it’s important to understand the difference between hard pulls and soft pulls.
Unlike hard inquiries, soft inquiries do not affect your credit score, and companies don’t need your permission to perform them. In most cases, you won’t even know when a soft inquiry has occurred. For example, have you ever received an offer from a credit card company in the mail?
Chances are that the company performed a soft pull to see if you qualify for the offer.
Employers may also perform soft pulls as part of a background check before hiring you to ensure that you are responsible. You also perform a soft pull every time you check your credit score.
Hard inquiries, on the other hand, do impact your credit score. Hard pulls occur when you apply for credit, and they can only be performed if you’ve given consent.
Hard pulls are recorded on your credit report and can make your credit score drop by around five points, so it’s important to avoid having too many of these inquiries on your credit report at once.
To get a more in-depth understanding of hard pulls vs. soft pulls reading: Credit Check: Hard Pull vs Soft Pull.
How Long Do Hard Inquiries Stay on Your Credit Report? – Timeline
So, how long do credit inquiries stay on your report?
Typically, hard inquiries will stay on your credit report for 24 months. However, according to Experian, hard pulls generally stop affecting your credit score after 12 months. So, while lenders can still see these inquiries after this period of time, you don’t have to worry about them dragging down your credit score after a year.
This timeline applies to any type of credit, including credit cards, business loans, personal loans, mortgages, student loans, etc.
It’s also important to note that all hard inquiries made within 45 days only count as one hard pull, so you don’t have to worry too much about your credit score when shopping for loan rates as long as you do it within that timeframe.
Can you remove hard inquiries from your credit report?
You cannot remove a hard inquiry that happened because you applied for credit. BUT you can remove an unauthorized hard inquiry.
If you were reviewing your credit report and found a hard inquiry you never authorized, you can request it to be erased from your credit report. How? By writing a dispute letter, making a phone call, or filing a formal dispute with all the credit bureaus whose report shows said inquiry.
Keep in mind that to file the dispute, you’ll need to provide documents to prove it was unauthorized.
The dispute investigation can take around 30 days.
Check with each credit bureau to make sure the exact process to remove an unauthorized hard inquiry.
Tips to Minimize the Impact of Hard Inquiries on Your Credit Report
To minimize the negative impact of hard inquiries on your credit score, you should be actively taking steps to improve your credit score in other ways.
Follow a few of these tips to help keep your credit score in good shape, so that hard pulls don’t have a major impact on your credit report.
1. Limit Your Credit Applications
First, try to limit the number of applications you submit for new sources of credit. Every time you apply for credit, the lender will perform a hard pull to ensure you meet their requirements.
If you do need to submit multiple new credit applications, be sure to submit them all within the same 45-day window. This will make it so that only one hard inquiry shows up on your credit report.
2. Stay on Top of Your Payments
Your payment history and the age of your credit accounts are two major factors used to determine your credit score.
As such, one of the easiest ways to improve your credit score over time is to consistently make on-time payments towards your debts. It may take some time, but making on-time payments will surely help mitigate the effects of hard inquiries on your credit report.
3. Keep Your Credit Utilization Low
Credit utilization is another major factor used to determine your credit score. Credit utilization is the ratio of your credit balances to your credit limits. In other words, it represents how much of your available credit you are using.
For example, if your credit limit is $1,000 and your credit balance is $200, your credit utilization would be 20%.
Generally speaking, you should try to keep your credit utilization at or below 30% for the best results.
4. Ask Your Lender Questions
Lastly, before applying for a new loan, credit card, or line of credit, be sure to ask your lender whether they will perform a soft pull or hard pull.
While most applications do require a hard inquiry to be performed, some lenders, like Camino Financial, will approve you after performing just a soft inquiry. Asking your lender what type of inquiry they will perform can help you avoid adding unnecessary hard inquiries to your credit report.
Hard Inquiries FAQs
How many points does a hard inquiry affect credit score?
Usually, a hard inquiry can affect your credit score by 5 to 10 points.
Does your credit score go up when a hard inquiry drops off?
No. After a year (when the hard inquiry stops affecting your credit), you’ll score won’t go up, but it just simply stops being a factor that affects it. You can easily start improving it.
How many hard inquiries are too many?
As you know, even one hard inquiry can affect your credit score, but if you have too many, you run the risk of having lenders not approve the credit you need.
Six inquiries will most definitely put off any lender (let’s just 6 hard inquiries are just one too many). But this really depends on the lender, for some, even 3 could be too many.
Why? Because lenders translate many credit inquiries as you being a high-risk lender.
Make sure you don’t make too many credit applications in short periods of time.
Camino Financial: Apply for a Business Loan Without Affecting Your Credit
One of the easiest ways to avoid hard inquiries is to apply for loans from lenders that don’t perform hard pulls before approving your loan.
At Camino Financial, we understand that people may want to avoid adding another hard inquiry to their credit report. That’s why we only perform soft pulls on our applicants. When you apply for a business loan at Camino Financial, your credit score will not be impacted.
Additionally, we don’t require a minimum credit score or credit history as we know that some of our applicants are immigrant business owners who haven’t remained in the US long enough to build a credit history.
Ready to take the next step towards improving your business without sacrificing your credit?
Request a loan quote today and discover instantly if you are prequalified without impacting your credit.