Q: How long will a credit inquiry remain on my credit report?
A: Whenever a lender is authorized to pull your credit report, a credit inquiry is performed. How long that particular inquiry remains on your credit record depends on the type of inquiry…
For hard inquiries (full credit checks)
Called hard pulls, these are credit pulls initiated by you when you seek more credit from any type of lender. The good news is that they generally drag down your FICO score by only a handful of points for a maximum of 12 months (if they have any impact at all). If there is an impact it’s primarily during the first 6 months, so it’s probably an exercise in futility to needlessly worry about this impact as long as you aren’t planning to get a new mortgage during the intervening year.With Experian, TransUnion and Equifax, hard inquiries will disappear from your file after two years. For soft inquiries Also known as a soft pull, this refers to an involuntary credit check that was not initiated by you. Things like pre-approved credit card direct mail offers and account reviews periodically made by banks and card issuers use “soft” credit inquiries. In fact, most large card issuers have massive lists of every credit-qualified adult in the U.S. and do quarterly soft pulls on each name to keep them refreshed for pre-approved direct mail campaigns. That means most of us have several soft pulls on our file at any given time. These soft inquiries will typically remain on your credit report for at least one full year. Thank goodness they are harmless.
How much will they affect your credit score?
Instead of asking how long credit inquiries stay on your credit report, you really should be more concerned with how long they affect your credit score. With “soft” inquiries, there is absolutely no negative impact to your credit score, so they should not be a concern. On the other hand, “hard” inquiries (also known as “hard pulls”) will usually ding your credit score to some extent. The exact amount of impact depends on a number of factors, which are not all public because the FICO formula is top secret. However, FICO has said there may be a greater impact for those with shorter credit histories and few accounts. It is often presumed that the higher your score is to start, the more of an impact a hard credit check will have. Although the hard inquiries remain on your credit report for two years, they have the most impact during the first six months. After a year has passed an inquiry will no longer be counted your FICO score, but it will still be visible to those who view your reports.
Why do credit inquiries lower your credit score?
According to FICO, there is a direct correlation between credit risk and the number of inquiries a person has on their credit. They state that those with six or more hard credit inquiries on their report are up to eight times more likely to file bankruptcy than someone with no credit inquiries. FICO has done lots of regression analyses to prove their point, I’m sure, though it seems really unnecessary to take a hit for getting a new cell phone contract with a different carrier.
When is it safe to apply for your next card?
Remember that a hard inquiry only counts against your score for 12 months and during that time, it has the most impact during the first six months. So unless you need to apply for a mortgage or major loan within the next year it shouldn’t be an issue if you apply for another card or two and have those inquiries temporarily on your credit report, as the impact should be fairly minimal. It’s also worth noting that the more types of credit and the number credit accounts you have, the better your score will be, assuming they are managed responsibly.
Updated August 2015