Hard Inquiry on Credit Score: Meaning, Examples and Impact

Have you recently seen a dip in your credit score that has remained at 760? It might not be your spending habits, but something called a ‘hard inquiry’. Every time you apply for a new credit card or loan, it leaves a mark on your credit report and can reduce your score by a few points (depending on your overall credit health).

Let us decode the impact of a hard inquiry on credit score, how to minimise the number, and what to know about unauthorised inquiries.

Quick Overview 

• 1 inquiry can reduce your score by 3 to 5 points.
• 3 hard inquiries within 6 months is concerning for the lenders.
• Dispute resolution time is between 30 and 45 days.

What is Hard Inquiry on Credit Score? 

A hard inquiry or ‘hard pull’ happens when a bank or NBFC thoroughly checks your credit report to evaluate your creditworthiness. Frequent inquiries within a short span can reduce your score by a few points, and the impact can last for 12 months.

However, hard inquiries are not just visible to you and your lender. Anyone reviewing your credit report can see the number of inquiries made.

Hard Inquiry Examples 

When you apply for a new credit card, your application generates a hard inquiry, which may slightly lower your credit score. Similarly, applying for a personal loan, home loan, or auto loan also results in a hard inquiry on your credit report. 

Impact of Hard Inquiry on Credit Score

• Impact

Even a single hard inquiry can lower your score by 3 to 5 points. The exact dip does not just depend on the inquiry itself, but also on your overall credit history. If you already have a poor credit record, the impact can feel more significant.

• Duration

The influence of a hard inquiry on a credit report usually stays for up to 2 years from the inquiry date. However, when it comes to affecting your credit score, the impact generally lasts for 1 year.

What Counts as Too Many Hard Inquiries? 

Having a few hard inquiries is normal since you might need a personal loan, home loan, or even a new credit card. However, if you have more than 3 hard inquiries within just 6 months, it raises a red flag for lenders. It suggests possible income instability or overdependence on credit.

How to Minimise Number of Hard Inquiries You Make? 

1. Think Before Applying

Before applying for a credit card, personal or home loan, you should assess your requirements twice. It can minimise the number of hard inquiries on your credit report.

1. Avoid Back-to-Back Applications

If you need a credit card and a home loan, keep at least a 1-year gap between the two applications. Frequent applications can raise concerns about your income stability.

1. Check Credit Reports Often

Review your credit report frequently and promptly dispute any errors with the bureaus to maintain an accurate credit history.

Can You Remove Unauthorised Credit Inquiries? 

Yes, you can remove unauthorised or erroneous credit inquiries from your report. For that, you need to navigate the Credit Information Companies (CICs) official website and take advantage of their dispute resolution system.

Steps of hard inquiry removal are:

Step 1: Enter details to log in to your dashboard.

Step 2: Fill out the ‘Dispute Resolution’ form and submit it.

Step 3: CIC reports the wrong inquiry to the respective lender. 

Step 4: After submitting the dispute request form, you will get a unique number that lets you track the progress of your request.

Please note that it takes 30 to 45 days to resolve a dispute. In case it is confirmed as unauthorised or erroneous, it may be settled much sooner.

In short, hard inquiries are a normal part of your credit journey, but too many in a short time can hurt your score. Space out applications, keep track of your report, and focus on healthy credit habits to avoid the negative impact of a hard inquiry on credit score. 

And if you’re planning to apply for a new credit card, here’s one that balances great perks with instant approval. Opt for the Stable Money Suryoday Bank Credit Card. 

Download the Stable Money app and hit the ‘Apply Now’ button!