Hard Inquiry
Hard Inquiry A hard inquiry is a type of credit check that occurs when a lender or financial institution reviews your credit report as part of a lending decision, such as when you apply for a credit card, loan, or mortgage. This reflects a formal request to assess your creditworthiness and is recorded on your credit report. This is evaluated within New Credit & Inquiries.
Plain-Language Meaning
A hard inquiry means a lender has checked your credit report because you applied for new credit, and this action is visible to other lenders who review your credit file.
Practical Example
If you apply for a new credit card, the card issuer will perform a hard inquiry to evaluate your credit history before deciding whether to approve your application. This inquiry will appear on your credit report and may slightly affect your credit score.
What It Does Not Mean
A hard inquiry does not refer to routine checks of your credit report for informational purposes, such as when you check your own credit or when a company pre-approves you for an offer without your application; those are considered soft inquiries.
How the System Uses It
The system uses hard inquiries as an indicator of recent credit-seeking activity. Multiple hard inquiries within a short period can signal increased risk to lenders, as it may suggest you are seeking to take on new debt. Each hard inquiry is recorded on your credit report and can have a small, temporary impact on your credit score.
Common Misconceptions
- “Hard inquiries always drastically lower your credit score.” Most hard inquiries have only a small and temporary effect on your score.
- “All credit checks are hard inquiries.” Only credit checks made for lending decisions are hard inquiries; others are soft inquiries.
- “Hard inquiries stay on your credit report forever.” Hard inquiries typically remain on your credit report for up to two years.
Related Pages
Related Glossary Terms
FAQ
- How long does a hard inquiry affect my credit score? A hard inquiry may impact your credit score for up to 12 months, but it usually has its greatest effect in the first few months and becomes less significant over time.
- Can I remove a hard inquiry from my credit report? A hard inquiry can only be removed if it is the result of fraud or was made in error; otherwise, legitimate hard inquiries remain on your report for up to two years.