How Do Credit Inquiries Affect Your Credit Score?

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Hard Credit Inquiries vs. Soft Credit Inquiries

It’s a common misconception that all credit inquiries — or any time your credit report is pulled — hurt your credit score. This isn’t true, however. Only “hard inquiries” will take a toll on your score. Hard inquiries are occasions when your credit report is pulled for the purposes of extending you credit or a loan offer. So when you open a new credit card account or apply for a loan, a “hard inquiry” will be made on your credit report.

[Free Resource: Check your free credit report and score]

A hard inquiry may negatively affect your credit score, but usually not by a lot. The exact amount of points isn’t known for sure, as credit bureaus closely guard the complex mathematical formulas they use to determine your credit score. However, about 10 percent of your score is determined by “new credit,” which includes credit inquiries. It’s quite common to see a 3-5 point deduction from your score for each hard inquiry.

There is an exception with hard inquiries, however, and that’s when you’re shopping for a home loan or car loan. If your credit report is pulled by several lenders within a short amount of time — generally within 30 days prior to scoring — those inquiries may be grouped together as one inquiry when it comes to your score (although they may be listed individually in the credit inquiry section of your credit report). So even though you may have had seven different lenders pull your credit report, your score will only get dinged once. Check out Bankrate for more info on loan shopping and credit.

In contrast to hard inquiries, “soft inquiries” also exist and will NOT affect your score at all. This is when you go directly to a credit bureau or a credit-related website like Quizzle and pull your credit report for your own educational purposes. The inquiry itself may show up on a future credit report, but it’s a soft inquiry and is not factored into your score.

[Free Resource: Check your free credit report and score]

If you’ve had a hard inquiry or two made on your credit report recently, don’t fret! If you use your credit responsibly, your credit score will rebound fairly quickly. Just continue to pay at least the minimum payments on ALL your credit cards and loans every month, and your score should fare well.

Find out what your credit score is now with your free (soft inquiry) credit report from Quizzle.

  • SC

    Most credit card companies does a pre-screening to see if a person qualify for a card. Do those inquires affect the credit score, cause some companies (i.e. C1) usually would do it 2 to 3 inquires a month. It was advised to me to at the least opt-out the whole pre-screening process. There’s a website for it also.

  • daria

    I was hoping you could re: to tell me if – when potential employers look into your credit- is that considered soft, hard ..medium??

  • Brian

    The pre-screening that credit card companies and other lenders perform does not affect credit scores. But, I do have a question regarding insurance. Auto and home insurance companies pull credit reports when pricing a policy. Does that affect credit scores?

  • Jason T. Chun

    Pre-screenings do not affect your FICO. An employer’s peek into your credit is an “inquiry” and will drop your FICO by 3 points. Insurance companies are “inquiring” your report, so yes, it dings your FICO. Two important facts regarding inquiries are missing from this article. Only seven inquiries affect your FICO. Whether you have 7 or 100, your FICO will drop by a maximum of 21 points. The other missing point is that inquiries drop off in 2 years. In regards to Brian’s question, it is very important that you ask yourself this question whenever someone asks for your SSN. “Am I asking these guys for money?” Insurance companies do not need your credit to price a policy. They just want it so that they can go after you if you don’t pay. Utility companies do this alot too.

    • Insurance Agent


      I just wanted to correct some misinformation in your post. Auto Insurance companies don’t NEED your SSN to price a policy. If you do not provide a SSN, that is no problem, as they will immediately assume you have the worst credit possible and your premiums will be sky high. Credit is a big portion of auto insurance premium calculations as data indicates a high correlation between bad credit & the probablility of higher than average claims. Therefore, the lower your credit score, the higher your auto insurance premiums. Insurance companies are not the mafia, nor are they a collection agency. An auto insurance company will simply flat out cancel a policy if the premiums aren’t paid.


    The article states: It’s quite common to see a 3-5 point deduction from your score for each hard inquiry. There is an exception with hard inquiries, however, and that’s when you’re shopping for a home loan or car loan….so even though you may have had seven different lenders pull your credit report, your score will only get dinged once.”

    What is the “common” point deduction for home loan hard inquiries?
    What is the “common” point deduction for car loan hard inquiries?

    Thank you for the information!

  • Larry Nelson

    Multiple inquiries for car loans do not count against your credit ONLY if the lender enters the correct purpose code indicating an auto loan. If the lender (car dealer) does not enter the code, the inquiry is not exempted from scoring by FICO. Most lenders DO NOT enter a code so the inquiries do count against their applicants.

  • david

    credit inquiries are scams. you shouldnt be punished for TRYING to get credit. I am so close to filing for bankruptcy becasue I cant ever seem to fix anything. its getting ridiculous.

    • kp

      pay your bills

  • Arturo

    What payments help in rising your score and when. Do employers have a right to pull your credit when applying for a job.

  • Nikki

    When insurance companies ‘pull’ your creidt this is a soft inquiry that will not effect the potential customer. Many times this information is used in creidt-based rating which actually gives you a discount for positive credit…not to come after you if you don’t pay.

  • Insurance Guy

    @ Jason T. Chun…you’re incorrect in saying that your FICO score is damaged by insurance companies. It depends on the type of insurance that an individual is applying for. If it is personal lines insurance (home, auto, toys, ect ect.) then their score is not effective. If you are seeking commerical insurance or life insurance then generally your score is effected.

  • JOHN

    Jason T. Chun does not know what he is talking about. When an insurance company asks you for your social, they in fact do need this to get a rate. It generates an insurance score that is used to provide a financial stability discount. This discount will vary depending on the info that is provided. It is a soft inquiry, therefor it does not affect your credit. There are some states where it is unlawful to use credit to determine rates and insurance companies will not ask for your s.s in those states.

    Due to my company guidelines I have to remain anonymous on external blogs when providing feedback but I am an insurance agent that is licensed in multiple states.

    As far as needing your ss # to go after debt. That is just completely false. In fact ss#s aren’t even useful in pursuing debt. Debt is pursued through other personal info that is provided.

  • seolinkvine

    I typically always go for leasing over renting a automobile. The thing is that it’s typically a much cheaper alternative over the long term. With a lease you don’t typically have to pay for minor fixes that can begin to add up. Plus you have the ability of switching cars every couple of years! As long as you stay in the mileage I highly suggest it.

  • diane

    I think it is highly unfair to have credit inquiries count against you. I get several “pre-approved” credit inquiries a week. I throw them into the trash-I never even open them. However 2 of them are showing on my credit report as “hard inquiries”, which I never requested. How do I “opt-out” of these “pre-screening” offers so this doesn’t happen again? (One of the worst is “Orchard Bank Visa” which is advertising on the very same page I’m writing on!) Disgraceful!

  • Steve G.

    I agree Diane – most of the outfits that mass-mail free credit “offers” also make the kind of loans that ding credit scores, so they are engaged in both handing out easy credit and punishing people for it at the same time. On the other hand, in mild defense of Jason, he was correct on one point, specifically, that many companies will try to get your SS# when they have no legitimate reason to seek it, so, even if an insurer claims they need it to price a policy, an applicant should be able to decline to give it without being penalized by having a dangling discount withdrawn. The unhappy fact is that, as in most cases, the system is set up to provide advantages to the lending industry, without regard to its unfairness – or even injury – to the public.

  • Debbie

    To opt out of pre-screening offers, you can call 1-888-5OPTOUT, which is 1-888-567-8688, or go to online and complete the request form. This is good for 5 years or you can opt out permanently by signing and returning a permanent opt-out election form. If you don’t have access to phone or internet, you may write each major credit reporting agency:
    Opt Out
    P.O. Box 919
    Allen, TX 75013

    Name Removal Option
    P.O. Box 505
    Woodlyn, PA 19094

    Equifax, Inc.
    P.O. Box 740123
    Atlanta, GA 30374-0123

    Innovis Consumer Assistance
    P.O. Box 495
    Pittsburgh, PA 15230-0495

    Be sure to include your name, date of birth, telephone number, and social security number. According to the Federal Trade Commission, the inquiries made by insurance & credit companies, do not have a negative effect on your credit report or score. See for the above information on the FTC website.

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