Does Your Credit Score Go Up When a Hard Inquiry Drops Off?

Whenever a person applies for a loan or credit card, the lender requests a copy of his credit report to evaluate whether to lend that person money. This request is known known as a hard inquiry or a hard pull. Every time a bank or lender requests a copy of a person’s credit report to lend that person money, a hard inquiry is placed on that person’s credit report.

Does Your Credit Score Go Up When a Hard Inquiry Drops Off?

Yes, your credit score may improve when a hard inquiry is removed from your credit report. A hard inquiry, commonly known as a hard pull, only remains on a credit report for two years. After the two-year period is up, the hard inquiry is automatically removed from your credit report. Once a hard inquiry drops off, expect your credit score to go up by 5 to 10 points. The point increase will vary from one person to another.

So, if you have applied for a loan, new credit card, or credit line increase, the bank you applied at will place what is known as a hard inquiry on your credit report. There are two types of inquiries that can be placed on your credit report: hard inquiries and soft inquiries. Hard inquiries affect your credit score while soft inquiries do not. Soft inquiries result when a person checks his own credit or a bank or lender checks a person credit to make that person a preapproved offer.

CSP PRO TIP: If you want to avoid having an unnecessary hard inquiry, you should check your lender’s approval requirements prior to applying for a loan or credit card. If you’re confident that you will be approved, go ahead and apply. However, if you believe that you’ll be denied, avoid applying to avoid having an unnecessary hard inquiry from being placed on your credit report.

How Does a Hard Inquiry Affect a Person’s Credit Score?

Whenever a hard inquiry is placed on a person’s credit report, he should expect his credit score to decrease by approximately 5 points. Some may notice a decrease of up to 7 points, while others may experience a decrease of only 3 points. The number of points a person’s credit score drops depends on what other information is contained within the person’s credit report.

If a person applies for several credit cards or loans, each application will result in a hard inquiry being placed on his credit report. Each inquiry will cause a slight drop in the applicant’s credit score. Although a single inquiry won’t create a large impact, if you apply for too many credit cards and loans within a short period of time, you can end up causing significant damage to your credit score. That said, hard inquiries only last for two years from the date you apply and many experts believe that their impact on your credit score begins to lessen within 12 months of you applying for credit.

Also, if a person applies for too many credit cards or loans within a short period of time, this behavior signals financial troubles to potential lenders and banks. Lenders may view you as credit hungry and too reliant on credit, eventually denying you the type of loan or credit you’re applying for.

What Happens to Your Credit Score When an Inquiry Drops Off?

As soon as a hard inquiry drops off of your credit report, you will immediately see a small bump in your credit score. Some experts argue that while it takes two years for a hard inquiry to fall off your credit report, the impact of a hard inquiry only lasts for approximately twelve months.

How Many Points Does Your Credit Score Go Up When a Hard Inquiry Drops Off?

After a hard inquiry drops off your credit report, you can expect your credit score to go up anywhere from 3 to 7 points. The number of points a person will see his credit score going up is different from one person to another, depending on the information within that person’s credit report. Also, if you have multiple hard inquiries on your credit report, you can expect each inquiry that drops off to increase your credit score.

Also, after hard inquiries drop off your credit report, there are other advantages than just a point increase. The less inquiries you have on your credit report, the better it is for you when you apply for new credit. This is so because lenders view those with fewer hard inquiries on their credit report as being less reliant on credit and therefore more credit worthy than someone who is applying for credit left and rights because he is in a financial crunch. So, don’t apply for credit cards and loans that you don’t need because this will result in a hard inquiry being placed on your credit report, which can hurt you when you need to apply for things, such as an auto loan, home loan, or credit card.

How Can You Improved Your Credit Score?

Here are a few tips that you can implement to improve your credit score:

1) Make Timely Payments

Making timely payments on your credit cards and loans accounts for 35% of your credit score. So, making timely payments on your accounts is the best thing that you can do to improve your credit score.

2) Don’t Utilize Too Much Credit

It is agreed upon by most experts that keeping your credit utilization below 30% is recommended to improve your credit score. For example, if you have 2 credit cards with a total credit limit of $10,000, you should aim to keep the combined balances of both your credit cards below $3,000.

3) Don’t Apply for Too Many Credit Cards at the Same Time

Applying for too many credit cards within a short period of time will result in multiple hard inquiries being placed on your credit report. Multiple inquiries within a short period of time can have a significant impact on your credit score as each inquiry could lower your credit score by approximately 10 points. So, accumulating too many of them within a short span can significantly reduce your credit. So, avoid applying for too many accounts at the same time.

4) Pay off your Balances

There is a myth floating around online that leaving a balance on your credit card will help you build your credit. However, this myth is not true. You should try to spend as much on your credit cards as you can afford to pay off completely at the end of the month. Paying off balances will improve your credit score because payment history accounts for a big portion of your credit score.

Credit Score Planet Frequently Asked Questions

1) For how long does a hard inquiry continue to affect your credit score?

Hard inquiries remain on your credit report for 2 years. However, many experts believe that hard inquiries only affect your credit score for 12 months. After the 12 month period, the affect of a hard inquiry begins to lessen.

2) How many points does a hard inquiry drop your credit score?

A hard inquiry can drop your credit score by 5 to 10 points. This number will be different from one person to another, depending on your starting credit score and the information contained within your credit report.

3) How to remove a hard inquiry?

A hard inquiry is automatically removed within 2 years. If you believe that a hard inquiry has been fraudulently added to your credit report, you should either dispute the inquiry or contact a credit repair service to attempt to remove the hard inquiry from your credit report.

4) Does pulling your own credit score hurt your score?

No, pulling your own credit report to view your credit score will not impact your credit score. This is so because when you pull your own credit, a soft inquiry is placed on your account. Soft inquiries do not count against you.

5) How long does it take for a hard inquiry to expire?

It takes 2 years for a hard inquiry to expire. Once it expires, you will see a small bump in your credit score upon its expiration.