Soft and hard inquiries
| Soft inquiry: no effect | Hard inquiry: small, short-lived effect |
|---|---|
| Checking your own score or report | Applying for a credit card |
| Pre-approved offers from lenders | Applying for a car loan or mortgage |
| An employer’s background check (with permission) | Some apartment and phone contract applications |
How much does applying cost?
A hard inquiry typically lowers a FICO score by a few points. FICO only counts inquiries from the past 12 months, and they drop off your report after two years.
Shopping around for a loan is fine. For mortgages, car loans and student loans, FICO counts several inquiries within a short window (14 to 45 days, depending on the version) as one, so comparing lenders doesn’t hurt more than applying once.
What else doesn’t affect your score
- Freezing your credit. A freeze stops new lenders seeing your report, which blocks identity thieves, and has no effect on your score.
- Your income, savings and job. They’re not in your credit report, though lenders ask about them separately.
- Debit cards and paying rent or utilities on time, unless the company reports to the credit bureaus.
- Prequalification. Checking whether you’re likely to be approved, before you apply, is usually a soft inquiry. The lender should say so.
What does lower it
- Missed or late payments, the biggest factor in a FICO score.
- High card balances compared with your limits.
- Several applications for new credit in a short time, outside a rate-shopping window.
- Collections and bankruptcies, which stay on your report for years.
How long things stay on your report
| On your report | How long |
|---|---|
| Hard inquiries | 2 years, and FICO only counts the last 12 months |
| Late payments | 7 years |
| Accounts sent to collection | 7 years |
| Bankruptcies | Up to 10 years |
Their effect fades long before they drop off. A single late payment from four years ago matters far less than one last month, especially if you’ve paid on time since.
Why you should check
Checking regularly helps you spot mistakes and identity theft early. You can get your reports from all three bureaus free every week at AnnualCreditReport.com, and many banks and card issuers show your score for free.
If you find an error, such as an account you didn’t open or a payment marked late that wasn’t, dispute it with the bureau that shows it. They have to look into it, usually within 30 days, and fix or remove what they can’t confirm. If someone has opened accounts in your name, freeze your credit at Equifax, Experian and TransUnion: it’s free and you can lift it when you apply for credit yourself.
More on what does move your score: credit scores explained.