Hard inquiry cost: how many points does it take off your score?

For most people, one hard inquiry takes fewer than five points off a FICO score, according to FICO, and it stops counting after 12 months even though it stays visible on your credit report for two years. The cost is higher when your file is thin or when several applications land close together. It drops to almost nothing when the inquiries are for the same mortgage, auto loan or student loan and fall inside a rate shopping window.

Inquiries sit in FICO’s “new credit” category, which carries 10% of the score. Payment history (35%) and amounts owed (30%) matter far more, so a rate that is a quarter point lower is almost always worth a few temporary points.

What counts as a hard pull, and what does not

A hard inquiry happens when you apply for credit and the lender pulls your report to decide. Your application is what gives the lender a “permissible purpose” under the Fair Credit Reporting Act; no separate federal consent form is required, which is why you have to read the application itself. Other lenders can see hard inquiries.

Soft inquiries never affect a score, and only you see them on your report. Some situations fall clearly on one side; others depend on the company:

How to tell before you click submit

Prequalification pages usually say so in plain words: “checking your rate won’t affect your credit score” or “this is a soft inquiry.” The full application carries an authorization near the submit button, along the lines of “you authorize us to obtain your credit report in connection with this application,” and many lenders add that it will result in a hard inquiry. If you see the authorization without any soft-pull promise, assume it is hard.

Do not judge by the information requested. Many soft-pull prequalifications ask for your full Social Security number and date of birth, because the lender still needs to find your file. When the page is unclear, ask the lender in chat or by email, “Is this a hard or soft inquiry?”, and keep the answer.

Rate shopping windows, model by model

• FICO treats mortgage, auto and student loan inquiries made within a short window as one: any 14-day span in older versions, any 45-day span in newer ones. FICO also ignores those inquiries entirely for the 30 days before it calculates the score, so a lender who scores you mid-search does not see them at all.
• VantageScore counts hard inquiries made within 14 days as a single inquiry, and VantageScore’s consumer guide says that covers all hard inquiries, credit cards included.
• Credit cards under FICO get no grouping. Three card applications in a week are three inquiries.
• Personal loans are not on FICO’s list of rate-shopping loans, so do not count on multiple applications being grouped.

You rarely know which model or version a lender uses, so the safe rule is to keep all applications for the same loan inside 14 days.

Personal loans: prequalify widely, apply once

Because personal loan inquiries are not reliably grouped, shop with soft pulls instead. Many online lenders, banks and credit unions offer prequalification that shows an estimated APR and amount without a hard inquiry. Collect three to five, compare the APR rather than the interest rate (the APR includes any origination fee; see APR vs. interest rate), then submit one full application to the best offer.

Treat a prequalified number as an estimate. The final offer comes after the hard pull and income verification and can be worse. For a benchmark, this is the Federal Reserve’s average APR on 24-month personal loans at commercial banks:

If your prequalified offers are well above that average, check your reports for errors before applying anywhere. The steps of the loan itself are in how a personal loan works.

What shopping is worth in dollars

These examples use round illustrative figures, not current offers. On a $30,000 car loan over 60 months:

• An APR of 7% costs $5,642.16 in interest. At 6.75% it costs $5,430.23, which saves $211.93.
• At 6.5% the interest is $5,219.07, which saves $423.09 compared with 7%.

On a $350,000, 30-year mortgage, a quarter point matters more: the payment at 6.75% is $2,270.09 a month and at 6.5% it is $2,212.24, a difference of $57.86 a month or $20,827.89 over the full term. For reference, this is the Federal Reserve’s average APR on 48-month new car loans at commercial banks:

A dealer’s first quote is rarely the best one available. Getting a credit union or bank quote inside the same two weeks costs you, at most, one grouped inquiry.

When to hold off on new applications

The exception is the six to 12 months before a mortgage. Mortgage pricing moves in 20-point score tiers, so a few points can change what you pay (see what score is good enough). In that period, skip new cards, store financing and phone financing, since each adds an inquiry and a new account that lowers the average age of your accounts.

Thin files deserve more caution too. FICO says inquiries can have a greater impact if you have few accounts or a short credit history, so someone with one card should space applications months apart.

Finally, read the inquiry list on your report. An inquiry from a lender you never contacted is not a scoring issue; it can be a sign that someone applied in your name. Dispute it and follow the steps in what to do about identity theft. Inquiries you authorized are accurate, and no dispute will remove them; they simply stop counting in FICO after a year. Your reports are free at AnnualCreditReport.com.