What is a hard inquiry on a credit score

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• A hard inquiry, also known as a hard pull, is a request to check your credit when you apply to borrow money through a credit card or loan.
• Each hard inquiry will lower your credit scores by a few points.
• A hard inquiry stops being calculated in your credit score after a year and falls off your credit report entirely after two years.
• Read more stories from Personal Finance Insider.

When you apply for a job, a potential employer may run a background check to make sure they aren't taking on what they deem to be unnecessary risk when hiring you. Similarly, when you apply for a loan, a lender will run a credit check, known as a hard inquiry or a hard pull, to assess the risk that you pose as a borrower.

A hard inquiry can hurt your credit score slightly, but you shouldn't let that stop you from applying for a new line of credit. 

When you apply to borrow money, the lender will file a request to a credit bureau to view your credit history, known as a hard inquiry. This will provide them with a comprehensive report of your credit history, so they can assess how risky it is to lend you money. 

Unlike soft inquiries, which are used in pre-approved offers that don't require credit, hard inquiries are recorded on your credit report. They're also factored into your credit score calculation, usually denting your credit score anywhere between three to seven points.

However, you shouldn't let the credit score drop from opening a new line of credit deter you from opening a new account. As long as you make your payments on time, you stand to gain more from a new line of credit than you lose with the one-time dink on your credit. "In six months from now, that new account is going to start turning into a good thing for your credit report," says Jeanne Kelly, a credit-building coach. 

Why does a hard inquiry affect your credit score?

Your credit score is a measure of how likely you are to repay your debts. When a loan application triggers a hard inquiry, it signifies that you are requesting to open a new line of credit, which adds an extra degree of uncertainty to the likelihood of you keeping up with your payments. 

While one hard inquiry might put a dent into your credit score, too many hard inquiries will add up and significantly lower your credit score. It might also throw up red flags for lenders, who will think twice about approving a loan. Kelly says that creditors might wonder "why is this person getting credit? What's happening? Why do they need all four or five new accounts?"

When you're shopping around for the best rates on a loan, you may incur multiple hard inquiries as you submit applications to several lenders. Fortunately, you are allowed to rate shop for 30 days after your first hard inquiry. This means that all the hard inquiries that you rack up while shopping for a loan will only be calculated as one inquiry on your credit score, though all the inquiries will still show up on your credit history.

How long do hard inquiries stay on your credit report?

A hard inquiry will remain visible on your credit report for two years before dropping off. However, it will only factor into your credit score calculation for one year.

You will not be able to remove an authorized hard inquiry on your credit report before those two years are over. However, if you notice a hard inquiry on your credit history that you did not authorize, you can go to the credit bureau's dispute center to resolve it. These inaccuracies may come from a hard inquiry that a lender pulled without your permission or, more severely, you may be a victim of identity theft, which means someone is trying to open a new line of credit using your personal information.

Hard inquiry vs soft inquiry

Sometimes a service provider such as a utility company or a landlord for an apartment rental will run a credit check on you, even if they're not offering a line of credit. This is known as a soft inquiry or a soft pull. They do this to see how responsibly you manage your finances. For example, a landlord might not want to rent an apartment out to someone with a past record of defaulting on their debts. 

There are several key differences between a hard inquiry and a soft inquiry. Most notably, a soft inquiry doesn't show up on your credit report. It also doesn't affect your credit score. 

Paul Kim is a former Personal Finance fellow at Insider. He wrote explainers and how-tos that helped readers understand how to better manage their money. An NYU graduate, he spent the majority of his journalism career at his student-run newspaper Washington Square News, where he wore numerous hats. Most recently, he helped rebuild the newspaper in the spring of 2021 as its managing editor after nearly all the staff resigned the previous semester over issues of editorial independence.When he's not writing, Paul loves cooking and eating. He hates cilantro. Direct tips on family recipes to @PaulKimWrites on Twitter.

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