Hard vs. Soft Inquiries
Soft inquiries occur when you check your own credit report or when a creditor checks your credit report for pre-approval purposes. Soft inquiries do not affect your credit score. There is no threshold for “too many” soft credit checks. A soft inquiry is when employers, or a company you have credit with, pulls your report to perhaps offer you more credit. These don’t hurt your credit score. Soft inquiries stay on your credit report for 2 years but have no negative impact.
Hard inquiries usually impact credit scores. Having more than six hard inquiries within a six-month period is considered too many. Multiple hard inquiries for a home or auto loan within a certain time period are generally counted as one inquiry. For most people, one additional credit inquiry will take less than five points off their FICO Scores. However, six or more within a short time affects your score. For many lenders, six inquiries are too many for approval.
Impact on Credit Scores
In general, credit inquiries have a small impact on your FICO Scores. The full range for FICO Scores is 300-850. Hard inquiries can leave a mark, especially for anyone rapidly applying for credit. A single hard inquiry drops your score by five points or less. Multiple inquiries can deplete your score by 10 points each. They only make up 10% of your FICO score.
“It’s ironic that so much attention gets focused on credit inquiries because they are such a tiny part of the FICO score,” said Craig Watts, FICO public affairs manager. “We generalize by saying that typically no more than 10% of a FICO score’s weight is determined by taking on new credit,” Watts said.
Frequently Asked Questions
How many inquiries is too many in 12 months?
Generally, keep the number of hard credit checks to less than six per year.
Is 4 hard inquiries bad?
Less than six hard inquiries within six months is typically not considered too many. However, it’s important to avoid rapidly applying for multiple lines of credit.