How long do enquiries stay on your credit report?

Whether you are applying for a new credit card, home loan, or a car loan, your lender will first enquire about your credit history before deciding if they can extend a new credit line to you or not.

But if you have been shopping around for the best crest card or the best home loan offer, then beware. Too many credit enquiries can end up staying on your credit report and your credit score can take a hit.

So how long do enquiries stay on credit report and most importantly, what can you do to get rid of them? Let’s take a look:

Anytime that someone checks your credit report including banks, lenders, and even you yourself, it is recorded as a credit enquiry into your credit report.

In other words, an enquiry can be termed as a credit check. It occurs when a legally permitted request is made to see your credit reports by a person or a company (including a bank or any other financial lender).

Inquiries can be a result of various reasons such as:

• When you applying for credit card application
• When a company you are in business with conducts an account review
• When a pre-approved credit offer is sent to you
• When you check your own score

All of these enquiries on your credit file, irrespective of their effect on the credit score, fall into one of the two main categories: Hard and soft.

Hard enquiries

Also known as ‘hard pulls’, hard enquiries can stay on your credit reports for up to five years and even affect your credit score.

These enquiries are created when you apply for a new line of debt (such as a personal or home loan, ​​or a credit card), and the financial institution checks your credit to make a lending decision.

So, when you apply for a new credit card, for example, the credit card provider will pull your credit report to check your score and determine whether you can be given the listed credit line, interest rates, fees, and benefits.

Since you are the one applying for the credit card, you explicitly give the service provider permission to perform a hard enquiry.

Some common instances that create these hard pulls in your credit reports are:

• Credit card applications
• Loan applications for mortgages, auto loans, personal loans, student loan
• Rental applications for apartments
• Application for jobs
• Requesting for a credit line increase

Soft enquiries

Also known as ‘soft pulls’, soft enquiries occur when you check your own credit reports or when a company preemptively pulls your credit report to provide you with pre-approval offers. Unlike hard pulls, these enquiries are only visible to you and do not stay on your credit file. It also does not affect your credit score.

So, when you check your own score and pull up your credit file, it is considered a soft enquiry and it does not affect your score in any way.

Credit enquiries can definitely affect your credit score – but not to a great extent.

In fact, other credit factors such as payment history and credit utilisation contribute more to the credit score. So if you’re paying off your debts responsibly, keeping your credit utilisation in check, and limiting your credit, then a few enquiries on your credit file would not adversely affect your scores.

Your credit score can take a hit if you are shopping around for credit, that is, applying for a number of credit card applications or loans in a short span of time.

Not only will this affect your score on your credit file, but it can also tell lenders that you have been applying for way too many offers.

Though it's important to note that a single credit application that creates a hard enquiry has either no or very minimal impact on your score, especially if you have an extensive credit history already.

However, people that only have a short credit history may see a bigger change in their credit scores. In case you are particularly new to credit, multiple hard enquiries in a short span of time can seriously dent your credit score.

Does your credit score go up when a hard enquiry drops off?

Yes, your credit score does go up when a hard enquiry on your credit file gets dropped off.

There are two ways for a hard enquiry to get dropped off – You can either get the hard enquiries dropped off from your report by proving inaccuracies in the enquiries or you can wait for the hard enquiry to fall off itself, which usually takes around two to five years.

What is the impact of multiple credit enquiries on the credit score?

Multiple credit card/personal loans applications over a short period of time can easily turn your good score into a bad one quickly. Multiple enquiries, in addition to having a negative impact, influence rejections too.

Rejections on applications can adversely damage your score and your credit file. Therefore, if your score stoops below-par level, it can be due to the combined effect of multiple enquiries and ensuing rejections.

To avoid the insidious fallouts, you should carefully look at the lender's terms and eligibility criteria, and refrain from seeking multiple credit cards/loans one after the other.

Pro Tip: To avoid such a huge knock off, you should wait for a minimum of 90 days between credit card applications.

What is the impact of rate shopping on the credit score?

When it comes to borrowers who are rate shopping, many credit scoring models are lenient as they don't evaluate all enquiries equally. Credit scorers evaluate such multiple enquiries differently because they know you're shopping for the best rate and not trying to apply for multiple mortgages, autos, or student loans

According to the latest scoring models from FICO® and VantageScore®, multiple mortgage and auto loan enquiries within a short period — 14 to 45 days — are simply ignored and treated as one single enquiry. Credit scores, therefore, tend to recognise it and are not significantly impacted by it.

As mentioned above, there are many other factors, apart from credit enquiries that can affect your credit score more drastically.

In fact, according to a report, credit enquiries on your credit file are only responsible for about 10 percent of your credit score. On the other hand, your payment history can affect about 35 percent of your score.

On average, a hard enquiry can affect your score by around 5-10 points. When these enquiries are dropped off, your credit report is updated and your credit score goes back to what it was before.

According to a report by FICO, six or more enquiries on your credit file are considered too many. That is because people with six or more enquiries are 8x more likely to file for bankruptcy or personal insolvency, which is considered a serious credit infringement.

Too many enquiries can bring down your score drastically and affect your overall credit account as well.

While removing an enquiry is not an easy feat, it is not impossible either. Here are the steps to do that:

1 - Check your free credit report

The first thing you need to do is get your free credit reports. You need your credit report in order to check all the recently made enquiries on it. You can access your credit account file through any credit reporting body.

2 - Review your report for any inaccurate hard enquiries

When you get your credit reports, you should check the enquiries section. In case you do find any hard pulls, you should review them to ensure you recognise the lenders in them.

Note that sometimes the name of the lender may not match the name mentioned in your credit report. This can happen if a bank partners with a retailer to manage a credit card program. So make sure you Google the name if you are confused.

3 - Submit a dispute if you find inaccurate hard enquiries

If you do end up finding hard enquiries that shouldn’t be there, you can submit a dispute to get them taken off of your credit report.

There can be two reasons for inaccurate hard pulls:

• A provider may have checked your credit score without your knowledge, while you were looking around for a new service. This can be grounds for submitting a dispute since the enquiry was made without your approval.

• You may not recognise the provider’s name at all because it's possibly an honest mistake or even fraud. In case it is indeed a fraud enquiry, you should report it immediately and set a fraud alert.

Cumulative minor hits on your credit scores due to enquiries can keep you from getting that credit to fulfil your aspirations. Below are 5 effective ways for you to minimise the effect of hard enquiries on your score and maintain a healthy credit score:

1. Strategically time your applications

Applying for multiple credit cards in a successive sequence can negatively impact your credit score. Therefore, when applying for credit cards, keep a minimum 90 days gap.

On the other hand, when applying for a mortgage or auto loan, submit all applications in 14 days as all of your applications then are treated as a single hard enquiry.

2. Say yes to selective applications

Don’t apply for credit products blindly. Research and study different financial products before submitting any credit application. Be selective in where you apply and go for a particular product that offers a lower comparison rate, decreased annual fees, and the option of pre-qualification.

3. Keep an eye on fraudulent credit enquiry

Scammers steal personal information and open credit accounts in different names, which can terribly impact your credit score. Therefore, if you suspect hard enquiries as a result of fraud, you should apply for a free 90-day fraud alert online with the credit bureaus. ​​The alert will appear on your credit report and will inform potential creditors that they must verify your identity before issuing credit in your name.

4. Maintain healthy credit habits

Hard enquiries have an impact on your score up to a limit and can be minimised by keeping other credit habits in check. Always focus on making your loan payments on time, maintaining your credit utilisation ratio, and keeping credit card balances no higher than 30% of your credit limit.

5. Keep track of your credit score

Credit reporting should always be a routine. If you keep an open eye on your credit report and score, you'll be able to see if queries are affecting your credit. Check your credit score frequently to see where you are and whether any potential errors are lowering your score. This will help you be mindful of what is affecting your score.

Credit enquiries can definitely prove to be a huge roadblock, especially if you are trying to build your credit score. That’s why you should routinely check your free credit report and keep an eye out for any of the enquiries being made.