How a Hard Inquiry on My Credit Report Actually Affected My Score

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How much should you fear a hard inquiry? Here's how my score was affected when I got one.

How much should you fear a hard inquiry? Here's how my score was affected when I got one. 

If you're in the market for a mortgage, car loan, or credit card, you may be worried about the impact your application could have on your credit score.  

This is a common concern because when you apply for financing, the lender checks your credit report, triggering a hard inquiry that stays on your record for two years. This is different from soft inquiries, which you get when you check your own credit or when a lender pre-approves you but you don't formally apply for a loan. Soft inquiries don't affect your credit at all, whereas too many hard inquiries can hurt your credit. 

But just how much will a hard inquiry affect you? While it can depend on your situation, the impact is often very low, as I recently learned when I got a new hard inquiry on my own report. 

How a hard inquiry impacted my credit score

A hard inquiry was put on my credit report when I applied to refinance my mortgage. It was the only one on my record as I haven't applied for any other credit recently. And because I check my credit score regularly, I was able to see the inquiry's impact: It sent my score down just eight points.

Nothing else had changed on my credit report from before the time that the hard inquiry posted. I'm certain of this because I was being extremely careful since I didn't want any new debt or a higher credit card balance to affect my ability to close on my mortgage. That means that the inquiry was the sole cause of the eight-point decline. 

While an eight-point decline isn't much, there are times when it could have an impact. If your credit is on the border of fair to good or good to excellent, an eight-point drop could push you to a different credit tier. This wasn't the case for my situation as I had a FICO® Score well above 800 before the hard inquiry so I remained above 800 even after it posted. 

How much will a hard inquiry affect your credit?

While a hard inquiry had a negligible impact on my credit, this won't necessarily be the case for every person who applies for new credit. 

The key is to not have too many hard inquiries. One single hard check didn't affect me much because it was the only one posted on my report. But if I'd been on a borrowing spree and it was one of many, then it likely would have sent my score down more.

Too many inquiries can have a bigger impact on your score because it can make lenders nervous that you're borrowing too much and might get in over your head financially. You'll likely want to avoid applying for too much credit at one time to avoid raising red flags that could hurt your ability to borrow.

If you haven't applied for credit recently but are currently thinking about taking out a new loan or opening a new credit card, you probably shouldn't worry too much about getting an inquiry on your credit record. While it's true that a hard credit check will lower your score, the decline is likely to be so small that it won't pose any real problems. 

Smart choices about borrowing can help you maintain a high score

Using credit responsibly, and in moderation, is the key to maintaining a high credit score. You never want to max out your cards or apply for too much credit at one time because this can raise red flags. Instead, keep your level of borrowing reasonable and always make payments on time. That way you should be able to earn and maintain a good score -- even if you have a few recent inquiries on your report.

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