What Is a Credit Inquiry?
A credit inquiry takes place when a bank, lender, or other credit-issuing institution views your credit report before offering you a loan or credit card.
There are other instances where a credit inquiry may also be used, which can include:
- A landlord or property management company checking your credit before approving you for an apartment lease
- A cell phone company inquiring about your credit before approving you for a contract
- A potential employer who wants to make sure your credit is in favorable standing before offering you a job
Different Types of Credit Inquiries
There are different types of credit inquiries that can take place on your credit report, including hard credit inquiries and soft credit inquiries. A hard credit inquiry can be a primary component of the underwriting process for all types of credit.
Soft credit inquiries, however, are often used more for marketing purposes — not just during a loan or credit approval process. It’s important to understand the differences between hard and soft credit inquiries because some inquiries can impact your credit report and credit score.
What are Hard Credit Inquiries
A hard credit inquiry (sometimes referred to as a “hard pull”) takes place when a company or entity has a legitimate business reason to look into your credit. In this case, the lender or creditor is seeking information about whether or not you will be reliable in paying the money back.
Your credit report will provide the lender or creditor with a “report card” of sorts in terms of your payback history, as well as other information such as how much credit you already have and what type of credit you carry (mortgages, auto loans, and/or credit card balances).
There are a number of lenders and creditors that will typically use hard credit inquiries. These can include:
- Mortgage companies
- Auto financing firms
- Student loan companies
- Lenders (personal and business)
- Credit card companies
When conducting a hard credit inquiry, the information that the lender or creditor has access to via your credit report can include the following:
- The number of accounts you’ve recently opened
- The proportion of accounts that you’ve opened recently (as opposed to longer-standing accounts)
- The number of recent credit inquiries that you have had
- The time that elapsed since any past credit inquiries
What are Soft Credit Inquiries
A soft credit inquiry may be requested for a number of different reasons. One way that creditors often use soft inquiries is for marketing to potential customers.
For example, a credit card company may want to send an offer to a list of people who meet specific credit-related characteristics, like having a credit score above a certain threshold.
Credit aggregating services may also use soft credit inquiries to help borrowers find a loan. These platforms will typically require information about a potential borrower, such as their Social Security number.
There are many reasons why a creditor or lender may conduct a soft credit pull:
- Credit card companies verifying a pre-approval offer to customers
- A company checking into your background as a new employee
- A landlord or property management company checking into an application you have made for an apartment rental
- Financial companies (such as banks, credit unions, or brokerage firms) verifying your identity
- Car rental agencies where you may be leasing a vehicle
- Utility, phone, and internet companies that are considering you as a new customer
In addition, your current creditors may also conduct a soft credit inquiry if you are applying for additional services from them, such as a new loan, or even an increase in a current line of credit.
You can also check your credit report and credit score, which counts as a soft credit inquiry as well. There are several ways to check your credit report and score for free, such as going through Credit Karma or Credit Sesame.
Once each year, consumers are allowed to receive their credit report for free from all 3 of the big credit bureaus: Equifax, Experian, and TransUnion. You can access this free credit report by going to AnnualCreditReport.com.
How long does hard inquiries stay on your credit report
Inquiries remain on your credit reports for two years. However, the effect of the inquiry is only felt for one year at most. And usually the impact is gone after a few months. The impact is generally greater for someone with little data on their credit report than for someone who has an average or extensive history using credit.
How do credit inquiries affect your credit score?
Hard inquiries count as a minor negative entries and account for 10 percent of your credit score. Although the exact effect on your credit score will vary depending on your credit history and current standing you can expect to see a one to five point drop to your overall credit score.
Although the exact drop to your credit score will vary, you can expect to see large drops in your score when these inquiries start to add up. Occasionally lenders will either pull your credit by mistake, pull your credit multiple times or pull your credit without your knowledge whatsoever.
Can you remove inquiries from your credit report?
Hard inquiries can be removed from your credit history if they occurred without your approval. If you did not have knowledge of the hard inquiries pulled from your credit profile, you have the right to ask for the inquiry to be removed. Some credit inquiries can also be removed if you felt pressured into an application process that led up to the credit inquiry.
You can remove a hard inquiry if:
- The inquiry occurred without your knowledge.
- The inquiry occurred without your approval.
- The number of inquiries exceeded what you expected.
- You felt pressured into approving the hard inquiry.
How to dispute a hard inquiry in 3 easy steps
1. Get copies of your credit reports
The first thing you should do is request a copy of your credit report with the three major bureaus: Equifax, Experian, and TransUnion.
2. Review your credit reports for incorrect, unauthorized, and accidental hard checks
Now that you have copies of your credit reports from the three major bureaus, you want to look them over and see if there are any inaccurate hard inquiries present.
“You can get a hard inquiry removed if the credit pull was unauthorized,” Tayne said. “Meaning, it came from activity that you were not aware of.”
Where should you look for this information on your reports?
Check these sections: credit inquiry, hard inquiry, regular inquiry, and requests viewed by third party.
If you didn’t authorize the hard inquiry or you didn’t apply for credit, you can request that it be removed.
What are some common examples of hard inquiries that you maybe didn’t authorize?
- Identity theft—a fraudulent application for a loan using your information
- A creditor pulling your credit without your consent
- A credit bureau erroneously included the inquiry in your credit report
- You clicked an ad on Facebook from a lender to “find out rates in your area”, filled out some information and unwittingly triggered an inquiry
Remember: even if an inquiry was made it error, it can still harm your credit! So you want to be sure to file a dispute with the credit bureaus to have it removed.
3. File your dispute with the credit bureau(s)
Ok, now that you have copies of your credit reports in hand, and you’ve identified some inaccurate hard inquiries, it’s time to file your dispute with the appropriate credit bureau.
“The credit bureau is legally required to investigate the dispute,” Tayne told us. “If an error is found, it will be removed from your credit report.”
How to send a credit inquiry removal letter
To send a credit inquiry removal letter you should contact the appropriate credit reporting agency in which the inquiry was published under. Credit inquiry removal letters can both be sent to the credit reporting agencies and to the lender who issued the credit inquiry.
1. Send the credit inquiry removal letter via certified mail
Certified mail is a way in which the sending and receiving of a letter or package is recorded. This form of mail will give you legal proof that the credit issuer or lender received the proper first notification to remove the hard inquiry.
2. Notify the lender first
Notifying the lender before you send a removal notice is necessary if you plan to take the dispute further to court. Although lenders may not be as responsive as a credit bureau, they are the proper first step for removing hard inquiries.
3. Include a copy of your credit report
Including a copy of your credit report with the highlighted unapproved hard inquiries may help with referencing your case. Although the credit reporting agencies will have easy access to your account, a hard copy will help investigators when processing your request.
4. Send to the appropriate credit bureau
It is important to send your letter to the credit bureau in which you used to view your credit report. Below are the addresses for each bureau:
P.O. Box 740256
Atlanta, GA 30374-0256
Equifax Dispute Information Center
P.O. Box 4500
Allen, TX 75013
Experian Dispute Information Center
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
TransUnion Disputes Information Center
Credit inquiry removal letter template
Your street number, street name
City, State, Zip code
Your phone number
Social Security Number
Name of credit bureau
Re: Reporting Unauthorized Credit Inquiry
To whom this may concern,
I am writing to request the removal of unauthorized credit inquiry/inquiries on my (name of the credit bureau — Equifax, Experian and/or TransUnion) credit report. My latest credit report shows (number of hard inquiries you are disputing) credit inquiry/inquiries that I did not authorize.
I writing to dispute the following inquiries and asking for their removal from my credit report.
Please have these/this unapproved inquiries/inquiry removed from my credit report within 30 days, as it is harming my ability to obtain new credit. I would appreciate a copy of my credit report once this issue is resolved.
Thank you for your assistance.
How long does it take to get rid of a hard inquiry?
If you just let them be, a hard inquiry will remain on your credit report for two years. (But it only affects your actual credit score—if at all—for one year).
If you’re going to dispute the hard inquiry, then the timeframe for getting it removed will really depend on the credit bureau as well as the complexity of your issue.
For most people, a good rule of thumb is it takes between 45 and 60 days to see the inquiry fall off, though if your dispute was minor, it could happen in less than seven business days.
How hard inquiries can harm your credit score
Inquiries are one of the five factors that impact your credit score, so it’s important to pay attention here.
Inquiries account for 10% of your credit score, so if you have too many hard credit checks, your credit score could drop by a few points and potentially result in being denied new credit or a loan, depending on what your score is at the time.
Why does your score drop because of too many hard inquiries?
“Hard inquiries indicate to creditors that you’re shopping around – and maybe even desperate – for credit, “Tayne said. “This is a red flag that you might be a credit risk.”
But it’s important to note again that hard inquiries will not always impact your credit score. According to FICO, credit inquiries generally have a small effect on your FICO scores, and for many people, an additional inquiry will take no more than five points off your FICO score.
As Tayne told us: “Hard inquiries don’t have a significant impact on your credit score typically, so focusing on improving your credit in other ways–such as paying down your balances and improving your credit utilization ratio–will be have a more significant effect on your score.”
How to monitor your credit reports going forward
You don’t want too many inquiries and negative items hitting your credit report since it can cause your score to drop, so you’ll want to set up a system to consistently keep an eye on your credit reports so you can spot any issues.
1. Perform regular checks
The easiest way to monitor negative entries is to conduct regular checks on your reports.
This way, you’ll be able to match every inquiry with its corresponding application.
Regular checks also make it easier for you to take action should something mysterious appear on your report.
2. Prevent unauthorized inquiries with a credit freeze
One way you can help prevent unauthorized inquiries is by making your credit report inaccessible to creditors and lenders with a credit freeze, which locks your credit report so a lender or creditor can’t access it to view your information.
A security freeze also helps keep identity thieves and hackers from applying for loans or opening new credit accounts in your name.
There are more factors to consider when doing a credit freeze, though, and the FTC has a good resource on it if you’re interested in learning more.
Remove Credit Inquiries FAQs
How long does it take for credit inquiries to come off my credit report?
Typically, a hard credit inquiry will remain on your credit report for 2 years. However, in most cases, this type of credit inquiry will only have an effect on your credit score for the first year.
Can you remove inquiries from your credit report?
You can attempt to remove inquiries from your credit report. However, in order to do so, the inquiries must not have been authorized by you. If you did authorize the credit inquiry, it is unlikely that you will be able to dispute it or have it removed.
How much do credit inquiries affect your credit score?
New credit — which includes any new credit accounts and credit inquiries — only makes up 10% of the overall metrics that are considered when determining your credit score. The other categories include:
- Payment history – 35%
- Amount owed – 30%
- Length of credit history – 15%
- Type(s) of credit utilized – 10%
With that in mind, an individual credit inquiry will typically not impact your overall credit score by very much — in most cases, just a few points.
Can you remove a closed account from your credit report?
Even though your credit score will continue to include account history from all closed and open accounts that remain on your credit report, the 3 big credit bureaus will typically remove closed accounts that were in good standing after about 10 years.
Removing a closed account yourself can only be done in certain situations. For example, if an account is actually open but incorrectly reported as closed, you could go through the dispute process to have it properly listed as open.
You may also be able to use a “goodwill letter” to request that a creditor remove a closed account from your credit report. While a creditor is not obligated to do so, there are some situations where they will end up removing the information from your report.
If you have an account that is closed with a balance remaining, there is a strategy referred to as “pay for delete” that could help you remove the account from your credit report.
Pay for delete can be a good option if you have a debt that can’t be disputed because you still owe on it. In this case, as its name implies, you can ask the creditor to remove the account from your credit report in return for you paying off the balance.
Why do credit inquiries hurt your score?
Although soft credit inquiries do not harm your credit score, hard inquiries can. One of the primary reasons for this is because looking for credit — especially if you have multiple inquiries — can mean you’re a higher credit risk.
Check out this Video: