How Many Credit Inquiries is Too Many?

Worried about the number of credit inquiries you’re accumulating on your credit report and wondering how many is too many? According to credit scoring company FICO, having six or more credit inquiries on your report is considered too many. With more than a handful of hard inquiries, lenders might start to wonder if it’s too risky to lend you money. 

Of course, six or more credit inquiries will only impact your credit score if they are hard inquiries. When you check your own credit report, this is considered a soft inquiry and will not affect your credit score. 

How do Hard Inquiries Affect Your Credit? 

A hard credit inquiry, also known as a hard pull, is when a lender reviews your credit report to determine if they want to loan you money. A hard inquiry is typically performed as part of the application process when applying for a student loan, mortgage or auto loan, or even a credit limit increase. By reviewing your credit report, a lender can assess how risky you are as a borrower and how likely you are to pay them back.  

A single hard inquiry can lower your score by a few points and can stay on your credit report for up to 36 months. Exactly how much a hard inquiry will impact your specific credit score depends on your individual credit history. Those with a long credit history and multiple accounts can expect less of a drop than those with a short credit history and few credit accounts. 

Why Do Credit Inquiries Hurt Your Credit Score?

A hard inquiry on your credit report indicates that you are looking for credit. If you are consistently looking for new credit, prospective lenders might question why. Are you desperate for money? Do you not know how to manage your credit properly? Are you spreading yourself too thin? 

When you have multiple hard inquiries on your credit report in a short period of time, the credit bureaus tend to view you as a higher default risk. There is good reason for them to believe this. 

According to research from FICO, people with six or more hard credit inquiries are up to eight times more likely to declare bankruptcy when compared to people who have no credit inquiries on their report. This is especially true for those with a limited credit history. 

If you’re shopping for a mortgage, car, or utility provider, you probably want to look at multiple lenders to secure the best deal. You might wonder how you can do this when you want to keep the number of hard credit inquiries to a minimum. Luckily, credit score models account for rate shopping. 

According to Equifax, multiple inquiries are generally counted as one inquiry for a certain period, usually between 14 to 45 days. The exact amount of days will vary between credit scoring models. For instance, if you’re shopping for a mortgage and you have several different lenders pull your credit score within a 15-day period, you will only have one hard inquiry show up on your credit report.

Note that this is not how it works for credit cards. Each time you apply for a credit card, it will show up as a separate inquiry. 

How Can I Check My Credit Inquiries?

You can check your credit inquiries by checking your credit report, which you can do for free with Borrowell. Remember, when you request your own credit report, this is a soft inquiry and it will not impact your credit score.

Your personal credit report will include a list of your hard inquiries and soft inquiries. Soft inquiries are only visible to you and do not appear on your credit report when it is pulled by a creditor. Hard inquiries are visible to anyone authorized to check your credit file. 

Can Hard Credit Inquiries be Removed in Canada?

You can not remove a legitimate inquiry from your credit report. The only time you can have a hard inquiry removed is if it is on your report in error. For instance, if a creditor pulls your credit without the proper authorization. 

It is very important to check your credit report on a regular basis so you can catch any possible errors if they occur. If you identify a hard inquiry that you didn’t authorize, you need to act quickly to try and get it removed.

As a first step, you can reach out to the company associated with the hard inquiry. If you didn’t authorize them to pull your credit, ask them to call the credit bureau and request to have it removed. If this doesn’t work, you can call the credit bureau directly to dispute the inquiry. The credit bureau is required to investigate any alleged errors. If they find that the inquiry in your report is there in error, the credit bureau will update your report. If they find there is no error, your report will remain unchanged. 

How Long Do Inquiries Stay on Your Credit Report?

Hard inquiries can remain on your credit report for three years. However, if you have five or fewer inquiries, they will stay on your credit report even after the three-year mark.

How Much Does Your Credit Score Drop After an Inquiry?

According to FICO, a hard inquiry can reduce your credit score by five points or less. The impact can vary depending on other factors like the length of your credit history and whether you pay your bills on time. 

While you want to avoid too many hard inquiries, it’s important to remember that “new credit” only accounts for 10% of your credit score. Your payment history accounts for 35%, and credit utilization (amount of available credit in use) accounts for 30%. So, if you’re worried about your credit score, make sure you focus on the things that are most important, like paying your bills on time and keeping your credit balances low. 

Can I Dispute Incorrect Credit Inquiries?

If you find a hard inquiry on your credit report that you believe is there in error, by law you are allowed to dispute it. To do this, gather up any documentation you think will help prove your claim. This can include receipts, statements, or other documentation. Your next step is to contact the credit bureau to submit your dispute. You can submit to Equifax online or by mail. You can submit to TransUnion online, by mail, or by telephone.   

Once you’ve submitted your dispute, the credit bureau will investigate. According to Equifax, processing of a dispute will take approximately 10 to 15 days for electronic submissions and 15-20 days if you mail it in. 

Once the investigation is complete, you will receive a confirmation letter with the outcome. 

How Do Minimize the Impact of Credit Inquiries?

There are a few things you can do to minimize the impact of credit inquiries, including: 

• Take advantage of rate shopping exceptions. If you are looking for a mortgage or a personal loan make sure you do your rate shopping within the defined period of time allotted by the credit bureau (typically between 14 to 45 days) to avoid multiple inquiries.  

• Space your credit card applications. Since there are no rate shopping exceptions for credit cards, multiple credit card inquiries in a short amount of time can hurt your credit score. 

• Only apply for credit when you need it. To reduce the number of new credit inquiries on your credit report, only apply for credit when it’s necessary. Before applying make sure you meet the pre-qualification criteria to ensure you are likely to get approved.  

• Review your credit reports regularly. Checking your credit report regularly will help to identify if there are any inquiry errors and allow you to take action to have them removed. 

The Bottom Line

Too many credit inquiries on your credit report can make you appear riskier to lenders which can reduce your chances of getting approved for new credit. While different lenders may have varying criteria for what they deem as “too many,” you should try to keep the number of inquiries under six. Also, remember that new credit inquiries only account for 10% of your credit score. Practicing good credit habits like always paying your bills on time and in full will have more of an impact on your overall credit score.