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How Do Credit Inquiries Affect My Credit Score?

By: Elite Legacy Education, November 28, 2017

As a real estate investor, it’s likely there will come a time where you need to apply for some form of credit – especially if you haven’t already at this point in your life. When you apply for credit, it often requires a credit check of some sort. Keep in mind that these credit checks, also known as inquiries, may have a lasting impact on your credit score. But don’t worry – we’re about to clear everything up right now.


What is a credit inquiry?


Credit inquiries occur every time someone tries to pull up and access your credit report. This is typically involved in most loan or property rental application processes. These credit inquiries come in two forms – hard and soft.


A hard credit inquiry occurs when you submit an application for some type of credit or loan. On the other hand, a soft inquiry occurs when a lender wants to pre-screen you for a credit or loan offer. In this latter case, you haven’t actually submitted an application yet.


Exploring soft inquiries and your credit score


Soft inquiries do not affect your credit score. In fact, lenders or companies don’t always need your authorization to conduct a soft check of your credit history. These are often used when pre-screening people for a variety of loan or credit offers.


Investigating hard inquiries and your credit score


Hard inquiries require that you give a lender permission to access your credit history, unlike soft inquiries. Giving permission for lots of hard inquiries in a short period of time may signal to other lends that you may have trouble paying your bills or risk overspending if you have more credit than you can afford to really have.


However, there’s no way to avoid having a hard check of your credit history at some point in your life. This will happen as soon as you submit an application to get approved for any kind of credit.


Hard inquiries stay on your credit history for 2 years, but they only have an effect for a maximum of 12 months. These tend to have an initial temporary decline in one’s credit score. However, if you are in good financial standing, it should quickly recover.


How many hard inquiries are too many?


Having too many hard inquiries in your credit history can hurt your credit score. Although, Experian does encourage rate shopping and considers all hard inquiries within a 90 day period of the same credit type to be counted as one. This means that you can apply for 3 different credit cards within a 90 day period and it will only be counted as one. However, if you apply for a credit card and a mortgage, then it will count as two inquiries. This way, consumers are not penalized for trying to find the best rate.




While we are in no way suggesting that you avoid credit altogether to avoid the consequences of hard inquiries, rather it’s something that’s good to be aware of so you can take the proper steps to avoid having too many hard inquiries on your credit report.


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