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Understanding Hard Inquiries and Their Impact on Your Credit Score

What Is a Hard Inquiry?

A hard inquiry occurs when a lender checks your credit report before making a lending decision. These inquiries, also known as hard pulls, are recorded by credit bureaus like Experian, TransUnion, and Equifax. They happen when you apply for credit, and the lender has a permissible purpose to review your credit report.

How Do Hard Inquiries Impact Your Credit Score?

Hard inquiries can have a minor impact on your credit score, typically causing a small drop of 10 points or less. The effect depends on the overall content of your credit report and the type of credit score being used, such as FICO® Score or VantageScore®.

FICO® Scores and Hard Inquiries

FICO® Scores consider hard inquiries from the past 12 months and apply a 30-day buffer for student, auto, or home loan applications. Multiple inquiries within a 45-day window are treated as a single inquiry.

VantageScore Scores and Hard Inquiries

VantageScore considers hard inquiries for the full two years they remain on your credit report. However, they generally have a minor impact that fades over the first few months. VantageScore also deduplicates most hard inquiries within a 14-day window.

How Many Hard Inquiries Is Too Many?

There is no strict limit on the number of hard inquiries that is considered too many. Credit scoring models account for rate shopping, so multiple inquiries for the same type of loan within a short period are treated as one. However, it’s wise to be cautious when applying for credit, as each hard inquiry can slightly impact your score.

How to Avoid Too Many Hard Inquiries

To minimize the impact of hard inquiries on your credit score, consider the following strategies:

• Rate shop within a 14-day period for auto, home, or private student loans.
• Get preapproved for personal loans and credit cards to avoid unnecessary hard inquiries.
• Focus on other important scoring factors, such as paying bills on time and reducing credit card balances.

How to Remove Inaccurate Inquiries From Your Credit Report

If you notice hard inquiries on your credit report that you did not authorize, it could be a sign of identity theft. You have the right to dispute these inquiries. Contact the credit bureau to investigate and remove any fraudulent inquiries.

Monitor Your Credit for New Inquiries

Regularly monitoring your credit report can help you stay on top of new inquiries and ensure your credit information is accurate. You can check your Experian credit report for free and receive real-time alerts for new hard inquiries.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate the complexities of credit and secure the best mortgage options available.

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