What are credit checks? How credit inquiries affect your credit scores

Credit inquiries are simply a record of when a lender, creditor, or other company reviews one of your credit reports. Or they may request a credit score based on the information in that report. While credit checks are a normal part of applying for loans, credit cards, or even jobs, they can influence your credit scores in different ways. 

Understanding how credit inquiries work helps you manage your credit profile.

Hard vs. soft credit inquiries

Consumer credit inquiries fall into two main types — hard inquiries and soft inquiries. 

Knowing the difference helps you understand what happens when your credit is checked and how to shop smarter for new credit. 

What is a hard inquiry?

A hard inquiry (sometimes called a “hard pull”) occurs when you apply for new credit such as a mortgage, car loan, credit card, or personal loan. Some business lenders check personal or business credit, and that can create an inquiry on the business owner’s personal or business credit files. 

Hard inquiries matter because they can impact your credit scores. Credit scoring models often take that into account when calculating credit scores, but different versions of credit scores (“models”) treat inquiries differently. 

What is a soft inquiry?

A soft inquiry occurs when your credit is reviewed, but not for a new credit decision. Common examples include checking your own credit score, a pre-approved credit offer, an employer conducting a background check, or one of your existing lenders reviewing your account. 

Soft inquiries don’t affect your credit score, no matter how many occur. They’re visible only to you when you review your report. Others who order your credit reports do not see them. 

How credit inquiries impact your credit score

With personal credit, an inquiry typically will lower your credit score by somewhere between three and seven points. The drop is often fairly small and temporary, but multiple inquiries in a short period can add up.

For the most part, credit scores often recover from a few inquiries within a month or two if your credit reports continue to show on-time payments. But there’s no guarantee that will be the case in your specific situation, which is why you want to apply for credit carefully. 

Grouping of inquiries: FICO and VantageScore

There are two main companies that create consumer credit scores: FICO and VantageScore^®. While there are different versions of these scores, all of them include inquiries as a scoring factor. 

Both group certain types of hard inquiries so multiple checks for the same purpose often count as one.

FICO^® consumer score models may group mortgage, auto, and student loan inquiries within a 15-, 30-, or 45-day window and count them as one depending on the version of the FICO^® Score used. Very old models of the FICO^® Score, including those that may be used for some mortgage loans, do not offer these groupings. 

VantageScore uses a 14-day rolling window where all similar inquiries are treated as a single event. 

Knowing these timeframes can help you shop for credit more efficiently. If you are shopping for a car loan, for example, you may want to compare rates within a two-week period to minimize the chances that each of those individual inquiries will affect your credit score. 

Duration of impact and reporting

Hard inquiries remain on your credit report for two years but typically only affect your consumer FICO^® credit scores for the first six to twelve months. Again, impact often fades over time. 

After one year, many credit scoring models stop considering them in active calculations, though VantageScore^® warns that inquiries may affect your credit score for up to two years.

Another point to keep in mind: an inquiry only appears on the credit report that was used for the credit check. If your lender checked your credit report with TransUnion, for example, that inquiry will not appear on your Equifax or Experian credit reports.

Credit inquiries and new accounts

Of the five main credit score factors, credit inquiries and new accounts tend to have less impact than others like payment history or credit utilization.

When your credit check results in a new account, you may see a slightly higher impact to your score than that from the inquiry alone. But again, the effect is often fairly temporary. 

That’s why you’ll often hear the recommendation to apply for credit carefully, and to avoid opening multiple new credit accounts in a short period of time. 

Business credit scores and inquiries

For business owners, credit inquiries can appear on both personal and business credit reports. Lenders often check personal credit when reviewing business loan or credit card applications — especially for startups or companies without established business credit.

Until now, we’ve been talking mainly about consumer credit report inquiries. The impact of inquiries on business credit is often different. 

First, the bureaus create their business credit scores and not all business credit scoring models will consider them. When they do, there may not be a distinction between soft and hard inquiries. 

Additionally, there is no time limit for reporting inquiries on business credit reports, though similar to personal credit, recent inquiries tend to have the most impact when they are evaluated. For example, the Experian Small Business Report lists inquiries from the past nine months and highlights new accounts added in the last six. 

Also keep in mind that some business credit score models may evaluate both personal and business data. For example, Experian Intelliscore Plus^SM may evaluate both personal credit data from Experian, and business credit data from Experian. In that type of scoring model, hard inquiries on your personal credit report can impact your business credit score. 

If a lender requests your Social Security number during a business application, there’s a good chance a personal credit check will follow, though sometimes they gather that information for identity verification or because a personal guarantee is required. 

Always confirm in advance with the lender if you’re unsure whether an inquiry will affect your personal or business file. You can also look for business lenders that don’t use a hard pull if they check credit. 

Strategies to minimize the impact of hard inquiries

The best way to reduce the impact of hard inquiries is to be strategic about when and how you apply for credit. Apply for credit you genuinely need and want, for example, and try to avoid submitting multiple credit applications within short periods. 

You may also want to use pre-qualification tools that rely on soft inquiries to see potential offers without affecting your score. 

When rate shopping for major loans, consider applying within a short period of time. Two weeks is often the shortest window for similar types of inquiries to count as one. 

If your credit history is otherwise strong, with a long history of on-time payments, you may see less impact than someone with a shorter or thin credit history. 

While applying strategically may help protect your credit score, new accounts can also hurt your credit scores if credit utilization is high or if you pay late. 

Monitoring your credit report for unauthorized inquiries

Check your consumer credit reports regularly from all three bureaus — Experian, Equifax, and TransUnion — to find out who has reviewed your credit reports. 

Do the same with your business credit reports from major credit bureaus like Dun & Bradstreet (D&B), Equifax, and Experian. 

If you find inquiries on your consumer credit reports you don’t recognize, you have the right to dispute them with the credit bureau, which must investigate promptly. 

Be vigilant here. 

An inquiry you don’t recognize can be a sign of identity theft. In addition to a credit report dispute, you may want to investigate further; for example, by contacting the company that checked your credit to find out why. In cases of potential fraud, consider placing a fraud alert or credit freeze on your files to prevent further misuse.

Frequently asked questions