Updated November 13, 2013

Hard Inquiries: What Is a Hard Inquiry on a Credit Report and How to Get Rid of It

Consumers looking to improve their credit score may find an odd but significant entry on their credit report: the hard inquiry. It's important to understand hard inquiries because they have a direct impact on your creditworthiness, as perceived by creditors, and will affect how much you pay for credit, including car loans and mortgages. The more hard inquiries you have, the more money you could wind up paying, so it's a good idea to manage them carefully.

What Are Hard Inquires?

When you apply for a loan, creditors will check your credit history to determine if they’re willing to lend you money and how much interest they’ll charge you. This credit check is called a hard inquiry, also known as a "hard pull."

This is different from a "soft inquiry," which occurs when you look at your credit report or businesses check it for any other reason besides a credit or loan application. A credit card application will result in a hard inquiry. On the other hand, an employer looking into a potential employee’s credit background will usually just be a soft inquiry. Soft inquiries (or "soft pulls") have no impact on your credit score and will remain on your credit report for two years.

Tip: Check your credit report by visiting AnnualCreditReport.com. AnnualCreditReport.com is the official site to get your free annual credit report.

How Inquiries Affect Your Credit Score

Hard pulls will also stay on your credit report for two years, but they do have a direct impact on your credit score. They can move your credit score as much as 10%, so they can easily pushing you down from the "excellent" category to the "good" range – or further.

In general, however, hard inquiries will not change your credit score at all until you reach the threshold of five or more inquiries – at that point, they can start to take more and more points off your credit score. According to myFICO, the amount of points it takes from a score will vary from person to person and may be less than five points per query in some cases.

It's usually better to keep the current number of hard inquiries on your report to fewer than five; under that level, they will likely have little to no impact on your credit score. This means you should do a soft pull and count the hard pulls on your report before applying for a new credit card or loan – and triggering another hard pull. To be sure, it is understandable that consumers want to shop for credit and might have a series of hard inquiries all at once.

How to Remove a Hard Inquiry

Since too many hard inquiries over time can negatively impact your credit score, it's wise to make only those loan applications that are absolutely necessary. Too much credit seeking can ultimately lead to too many hard inquiries.

If you have too many hard inquiries on your report now, the best thing to do is wait them out. Hard inquiries will disappear after two years, so if you have four hard pulls on your report, try to wait until the oldest one disappears before you apply for another card. This will keep your credit score high and your interest rates low, saving you money.

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