Article

How Many Points Does Your Credit Score Go Down for an Inquiry?

Author

LevelCredit LevelCredit

Published

15 March 2020

There are two types of inquiry: hard and soft. To answer “how many points does your credit score go down for an inquiry?”, we need to know the difference. 

Hard Credit Inquiries 

Hard credit inquiries, also known as “hard pulls”, are typically performed by credit lenders when you are seeking a mortgage, auto loan, credit card, or student loan. Hard pulls can directly affect your credit score. Why? Because they indicate that you are seeking new lines of credit. Repeatedly seeking new lines of credit would be a worry for lenders, so each hard pull tends to temporarily decrease your credit score by a few points.

It’s not much, though; according to FICO®, your score can drop by about 5-10 points on average. Inquiries stay on your credit reports up to two years, but most scoring models only consider those within the past year and ignore older ones.

However, these decreases can add up, and if you’re not careful with opening several new accounts within a short span of time, they can damage your credit score. Most lenders even limit the number of applications they want to see in your report before they approve you for more (often a maximum of two applications within six months).

 

Soft Credit Inquiries 

Soft inquiries (or soft pulls), on the other hand, do not hurt your credit score at all. In fact, they do not even reveal your entire credit history.

This is because a soft pull occurs when a lender only wants to get a general idea of your creditworthiness. The most common soft pull happens when a credit card company pre-approves you, but it also occurs when a potential landlord, insurer or employer checks your credit history to get a sense of how financially responsible you are. Thanks to the Fair Credit Reporting Act (FCRA), access to your credit report is strictly limited.

It is also classed as a soft inquiry when you check your own credit report, through CreditKarma or a credit bureau.

LevelCredit also performs a soft inquiry when you sign up and start reporting. Our soft pull is designed to get you the data needed to help educate you about your credit. We never have, and never will, perform a hard pull.

Here’s the key: If you’re ever not sure, ask! Lenders need your permission to perform a hard pull. When they ask you if it’s okay to check your credit, make sure you know whether they mean a soft or hard pull, and then make your decision.

Now that you’ve learned how many points your credit score goes down for an inquiry, there’s so much more you can learn about credit building. If you are interested to know more, you can check out this blog. Or you can just experience LevelCredit first-hand and start building your credit score with your rent!