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The Mysterious Wonders of Your Credit

Have you ever asked yourself how long a credit inquiry actually stays on your credit report? Do you even know what a credit inquiry is? These are two questions that you really should know the answer to, and if you don’t know the answers, then I advise you to keep reading, my friend.

What is an Inquiry?

Now, a credit inquiry is performed on your credit report when a business requests to check your credit. How long an inquiry remains on your credit report, depends on the type of inquiry. There are two types of inquiries; a soft inquiry, or a hard inquiry. They’re also sometimes called “soft pulls” or “hard pulls” You can probably already guess; a soft pull is WAY better than a hard pull. Think of this like a friendly game of tug-of-war. Only this “friendly game” is really a game with your credit. If you’re on the opposite end of the rope, which would you rather have your opponent do; a hard pull or a soft pull? A hard pull might just put you on your back for a few moments, am I right? A soft pull, on the other hand, wouldn’t bother you; but it would be just a good enough tug to let you know your opponent is there.

Explanations of Soft Inquiries

Let’s get started on soft inquiries. A soft inquiry, or “pull”, doesn’t affect your credit what so ever. It isn’t a type of credit inquiry where your credit is being reviewed by a probable business or lender. No, instead it may be an existing business, which you already have a credit account with, making an inquiry. Or perhaps you’re checking your own credit; or a credit card company with promotional offers is checking your credit. In other words, you didn’t initiate the credit check; it was involuntary. Most of us here in the U.S. usually have multiple soft pulls on our files at any given time. Soft pulls stay on your credit report for at least 12 months, but they’re totally harmless!

Difference Between Soft and Hard Inquiries

Now let’s move onto hard inquiries, or “hard pulls”. Say you go to apply for credit from a likely business lender. This is when a hard pull will be made. So if you need to take out a loan for a new car, or mortgage, or even apply for a new credit card; a hard pull will also be made at this time. Each one of these is a different inquiry, too, so if you aren’t careful with this, it can hurt your credit. So let’s say you just got a promotion at work, and you’re ready to go out and buy yourself a new house. If you have have multiple house or car loan inquiries in a month they will be combined so you can shop the best rates available.

I guess the good news here, would be that hard pulls usually bring your FICO score down for only 12 months, the major impact being within the first 6 months.

The Damages an Inquiry Can Do

Did you know that people who have more than 6 hard credit inquiries on their file are 8 times more likely to go bankrupt than those who have no inquiries at all? I know what you’re all thinking, so I’ll say it for you; that is insane! Can you believe it? Who knew that such a little inquiry can cause this much trouble? So, as you can assume; the number of inquiries on a person’s report has a direct link to having credit risk. This, my friends, is why you need to be careful when you’re dealing with your credit.

The Actual Impact of an Inquiry

If I were you, I would be more concerned with how long inquiries impact my credit score, and not how long they stay on my file. I already touched subject a few paragraphs up, but I feel like I should go more into detail. Remember; soft inquiries have NO impact and you should never worry about them, hard inquiries can put a pretty big ding in your score, but it won’t be permanent. There’s a number of factors that conclude how much of an impact hard pulls do, but they aren’t all public considering FICO’s formula is top secret. Some of them are:

  • The number of accounts that were recently opened by you
  • The number of recent inquiries
  • The time since you’ve last opened your accounts
  • The time since your last inquiry

The Death of Your Credit Score

Now, we’ve talked all about how long inquiries affect your credit score, and what makes up an inquiry, but we haven’t really talked about HOW it affects your credit score. It’s been noted that if you have very little accounts and you have a short credit history, then the inquiries will have a greater impact on your score. Also, if you have a really high credit score, a hard pull will have a bigger impact. Remember this won’t be a permanent ding in your credit score; it’s only temporary. After a full year, inquiries won’t be counted, but can still be visible to someone peaking at your credit report.

When You Should Apply for Another Card

Honestly, you’re able to apply for a new credit card whenever you want! I wouldn’t advise you to apply for one if you plan to apply for mortgage or a major loan in the same year! Remember, hard pulls stick with you for a full year. Yes, it mostly impacts your score within the first 6 months, but it’ll still be available to view. You don’t need businesses seeing hard inquiries when you request for a big loan of apply for mortgage. The more accounts you have, the better your score will be, but remember that a hard pull will affect you more!

You Have Been Warned, My Friend

Now that we’ve discussed all the major information over hard and soft inquiries, you should be good to go. I feel like your credit is just a huge juggling game. You need a good credit score in order to buy a house, or a car, or make loans, am I right? Then when you actually do go out and buy a new house and all that good stuff, it brings your score down for a whole year! That’s when you need to bring out your white flag and yell, “Well played, my friend!” to the Heavens. You’re either really good with the credit game, you’re really bad, or you just don’t understand the game at all. That’s what the internet is for. Sure, you can’t believe everything you say on the internet, but you can actually find some great educational stuff on here! So get out there and play the game, because like it or not, you’re forced to play anyways!

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