How Long Do Hard Inquiries Stay On Your Credit Report?
If you are asking the question of how long do hard inquiries stay on your credit report or how many points do credit inquiries lower your score, you are not alone. Apart from these, when it comes to hard inquiries, there are other issues that bother the mind of credit cards holders. These issues usually come in form of questions such as; does your credit score go up when a hard inquiry drops off? How long do hard inquiries affect credit score? How long does it take for credit inquiries to come off the report? How can I dispute hard inquiries credit report? In this article, we shall be throwing light on some of these issues.
If you are a card user, possibly you must have come across credit enquiries on your credit report. Whether these credit inquiries will have impact on your credit score or not depends on the types of credit inquiries being made on your credit. Basically, there are two types of credit enquiries namely soft credit enquiries and hard credit enquiries. You may say, what makes an inquiry soft or hard. These are technical terms used by credit cards dealers. I will try to explain the terms to you in a simple form that will make you understand it. But before doing that, it is good that you understand what constitute an inquiry. Inquiry occurs when request for information about your credit is being placed either by you or another third party. It is good to note that nobody is permitted to make inquiry about your credit without first seeking your consent.
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Hard Card Inquiries
Hard card inquiries happen when an organisation request for your credit information. This type of inquiry usually occurs when applying for car loan or lease. It can also occur as a result of application for other loans such as student loans, personal loans, business loans or mortgage loan. Besides, if you apply for a credit card, the enquiries made by the credit card companies will also appear on your credit report as hard inquiries. The reason these are categorised as hard inquiries is because the affected transactions have the capability of affecting your credit. For example, if you take new loan, you will be under obligation to make regular payment in order to liquidate the loan. Some credit bureaus will like to include your application for new utility as part of the hard inquiries that will appear on your credit report. Monthly utility bills payment will definitely increase your cash outflow and this will affect your credit in one way or the other.
Soft credit inquiries
These are inquiries made on your credit which are not being reviewed by a lender. Soft inquiries occur when you check your own credit or when a credit check is being made by businesses to offer you goods or services. Inquiries about your score from businesses you already have an account with are also classified as soft inquiries. Some credit bureaus will also classify other transactions from insurance, phone, or utility companies as soft inquiries. Nevertheless, in order to be at a safer side, you may need to make clarification before giving them the permission to check your credit. Once you have given them permission, it may be difficult for you to get such inquiries out from your credit report. This means that you will have to wait for twenty months before it is totally pulled out from your report. Soft inquiries will not have negative effect on your credit score. Therefore, you don’t need to bother yourself about them.
How many points do credit inquiries lower your score?
As mentioned, soft enquiries do not have any negative effect on your credit score. It is the had inquiry that may affect your credit score. How many points do credit inquiries lower your score depends on situations and circumstances surrounding the transactions. However, An inquiry is not expected to drop your credit score more than 5 points under any circumstances. If somebody with an excellent credit score having no balance in his card applies for another credit card, the impact such inquiry will have on his credit score will be minimum if any. So, before you can tell how many points do credit inquiries will lower your score, you need to put your situation into consideration. The good news is that, hard credit inquiries are not a major consideration in assessing your credit scores. The maximum points credit inquiries can lower your credit score is about forty five points regardless of how many inquiries you have on your credit. Nevertheless, in order to limit the number of inquiries you have on your credit, it is suggested that when you shop around for auto loan or mortgage loan, you should do it within a space of a very short period. Every time you shop for auto loan or mortgage loan, inquiry is being made on your credit. However, credit bureaus understand that consumers usually shop around to find good deals. Therefore, if the shopping is done within a space of short time period, credit bureaus will classify the rate shopping as a single transaction. So, instead of having your credit score being lower by each inquiry, all the inquiries for the same purpose within the period will be seen as one. That means your credit score will only be affected by maximum of five points. By FICO standard, auto loan inquiries made within fourteen day period interval will be regarded as a single transaction while mortgage loan inquiries made within thirty day period interval will also be regarded as a single transaction.
How Long Do Hard Inquiries Stay On Your Credit Report?
Let me put the question in another way. How long does it take for credit inquiries to come off the report? A hard inquiry will stay on your credit report for twenty four months. However, hard inquiries only affect your credit score for twelve months. The most impact usually occurs during the first six months. Because of this length of period hard inquiries stay on your credit report, it is better not to have too much application for credit cards or loans within a twelve month period.
Does your credit score go up when a hard inquiry drops off?
You may not expect any change in your credit score when a hard inquiry finally drops off your credit report. The reason is that, the effects of any hard inquiry will only last for twelve months. The fact that hard inquiries still appear in your credit report after the first twelve months does not mean that they negatively affect your credit score any more. This means that before a hard inquiry drops off, the effects must have been neutralised.
How can I dispute hard inquiries in credit report?
If you review your credit report and notice hard inquiries which you did not authorise, you can actually dispute such hard inquiries. But before I go into the details of how you can dispute any hard inquiries in your credit report, you may need to ask yourself if the result of the exercise actually worth the efforts. I need to remind you that I mentioned in my answer to the question “How many points do credit inquiries lower your score?” that the effect that a hard inquiry may have is to lower your score by maximum five points. Even though hard inquiries stay on your credit report for twenty four months, the effects will not last more than twelve months. What I am saying in essence is that, credit inquiries is not among the major factors credit bureaus consider in scoring your credit. The major factors used to calculate your credit score include your payment history, credit types, new credit, credit length and the amount owed. Instead on spending your time on what that doesn’t count much, if you focus on how to improve the factors mentioned here, you will soon see an improvement on your credit score.
Another thing I need to mention here is that, the fact that you can’t remember authorising a business or organisation to conduct your credit check does not mean that you did not consent to it. When shopping for car loan or mortgage loan, a lot of people ignorantly authorise auto dealer to seek for financial institutions that can offer the best interest rate. Therefore, all such financial institutions have the right to do a hard pull on your credit.
Having said all these, if you still want to dispute hard inquiries in your credit report, you can achieve this by making an official written letter to the institution involved notifying them about the credit inquiry from their organisation which you did not authorise which appeared in your credit report. You should therefore ask them to contact the named credit bureau to withdraw the unauthorised hard inquiry from your credit report. You can quote the Fair Credit Reporting Act, Section 1681b(c), captioned “Transactions Not Initiated by Consumers”. For the avoidance of doubt, you can ask that to send you a copy of any document authorising them to make such inquiry. Don’t forget to put your full name, detailed address and telephone number.
In conclusion, I will rather say that you to bother much on how long do hard inquiries stay on your credit report. Instead, focus on the major factors which have greater impacts on your credit score.