Do Multiple Loan Inquiries Affect Your Credit Score?

What Is a Soft Inquiry?

A soft inquiry is a record of when someone checks your credit for a non-lending reason or without your permission. These do not affect your credit scores, and they can happen when:

• You check your own credit report or score
• You get preapproved for a credit card or loan
• You're included in a list that a creditor uses to send prescreened firm offers of credit
• A current lender or card issuer checks your credit
• An employer checks your credit
• A collection agency checks your credit to find your contact information
• An insurance company uses a credit-based insurance score
• There's a court order that results in a credit check

Some applications usually result in a soft credit inquiry, such as a utility, phone or rental application. You can double-check with the company before agreeing to the credit check to be certain.

What Is a Hard Inquiry?

A hard inquiry is a record of when someone checks your credit report in response to an application for credit. They can happen when:

• You apply for a loan
• You apply for a line of credit
• You apply for a credit card
• You ask for a credit limit increase (though some issuers use a soft inquiry)

Hard inquiries can hurt your credit scores. But a single new hard inquiry usually only drops your FICO^® Score^☉ by less than five points (or five to 10 points for VantageScore^® credit scores), and the effect may only last a few months.

Learn more >> What's the Difference Between a Hard and Soft Inquiry?

Why You Should Avoid Too Many Loan Inquiries

Credit scoring companies have found that people who are applying for and opening lots of new accounts might be more likely to miss a payment in the future.

Although a single hard inquiry might only hurt your credit scores a little, multiple hard inquiries could increase the impact. And an application can lead to a hard inquiry even if the creditor denies your application.

However, credit scoring companies also recognize that people commonly shop for loans to find a good offer. For example, you might get multiple auto loan or mortgage offers to compare the rates and terms, but you'll only wind up taking out one loan. The companies created rules that allow you to shop for credit without worrying about having too many loan inquiries.

Learn more >> How Many Hard Inquiries Is Too Many?

How Long Do Hard Inquiries Stay on Your Credit Report?

Hard inquiries can stay on your credit reports with the three national credit bureaus (Experian, TransUnion and Equifax) for up to two years, but they likely won't affect your credit score the entire time.

• FICO Scores only consider inquiries from the previous 12 months.
• VantageScore credit scores may consider hard inquiries from the previous 24 months.
• With both FICO and VantageScore credit scores, the impact of a new hard inquiry tends to only last a couple of months.

Additionally, hard inquiries only get added to the credit report that a creditor requests.

For example, if you apply for a personal loan, the creditor might check your Experian credit report and a credit score based on the report. A new hard inquiry will be added to your Experian credit report, but won't be added to your TransUnion or Equifax credit reports—or affect your scores based on those reports.

Some applications, such as mortgage applications, tend to lead to creditors checking all three of your reports. And some creditors might check more than one of your credit reports when you apply for other types of loans or a credit card.

Do Multiple Credit Inquiries Count as One?

Multiple hard inquiries from loan applications sometimes count as one inquiry for scoring purposes. But it depends on the type of loan, the type of credit score and when the creditors request your credit reports.

The rules for VantageScore credit scores are fairly straightforward. VantageScore counts multiple hard inquiries from a 14-day period as one inquiry.

The VantageScore credit scoring models "deduplicate" hard inquiries from various credit applications—including loan and credit card applications—that occur within that 14-day window. That means the hard inquiries from different types of loans can count as one inquiry for scoring purposes, as long as they're made in the same 14-day window.

FICO's credit scores work differently:

• Only applies to auto, home and student loans: FICO only deduplicates hard inquiries from auto, home and student loans. Federal student loan applications don't result in hard inquiries, but private student loan applications could.
• Only deduplicates multiple inquiries of the same type of loan: For example, if you applied for three auto loans and two home loans in the same week, FICO Scores would count that as two hard inquiries—one for the auto loans and one for the home loans.
• Generally uses a 45-day window: The latest FICO Scores use a 45-day window for deduplicating hard inquiries, but some older models use a 14-day period.

FICO Scores additionally ignore hard inquiries from all auto, home and student loans from the previous 30 days. VantageScore doesn't have a similar "buffer" for recent hard inquiries.

Learn more >> How Does Rate Shopping Affect Your Credit Scores?

Don't Be Afraid to Gather Loan Offers

You might not want to repeatedly apply for new loans or credit cards if you likely won't get approved or you're preparing for a major purchase, like a new car or home. However, you don't need to let fear of hard inquiries keep you from rate shopping when you need a loan.

You can use your knowledge of scoring rules to make strategic decisions, like submitting applications during a 14-day period. Additionally, you can try to get preapproved or prequalified to see your estimated offers with a soft inquiry, which won't affect your scores.

Check your Experian credit report for free to see which hard inquiries are on your report. Experian can also match you with loan offers based on your unique credit profile.