When you apply for any kind of credit, the application triggers a hard inquiry on your credit report which can cause your credit score to drop a few points (although the drop is temporary). The good news is, FICO® scoring models may count multiple inquiries made within a short period as one inquiry — unless you're applying for credit cards.
Confused? CNBC Select explains why FICO credit scoring models treat credit card applications differently and how you can prevent hard inquiries from giving your credit score a hard time.
When do multiple hard inquiries count as one?
If you've recently applied for a loan, such as a car loan, mortgage or student loan, you may immediately notice a hard inquiry on your credit report — especially if you're using a credit monitoring service. For example, Experian free credit monitoring might notify you as soon as a hard inquiry hits your Experian credit report. CreditWise® from Capital One sends an alert when your TransUnion credit report changes.
On Experian's secure site
Cost
Free
Credit bureaus monitored
Experian
Credit scoring model used
FICO®
Dark web scan
Yes, one-time only
Identity insurance
No
Terms apply.
But these changes may not immediately affect your FICO score (remember, your credit report and credit score are two related, but separate, things lenders consider). In fact, loan inquiries are ignored for their first 30 days on your report. According to credit expert John Ulzheimer, formerly of FICO and Equifax, this process is called "buffering". And after the first 30 days pass, these inquiries might count as one because of a different process called "deduplication" — or "deduping" for short.
The deduping process treats loan inquiries of the same type that have occurred within the same 45-day period as a single search for credit. Due to this, they're considered as one inquiry for FICO scoring purposes.
"The goal with that logic is to not penalize consumers for rate shopping for mortgages, auto loans and student loans," Ulzheimer says. "So, even if they have multiple mortgage, auto and student loan inquiries, they're likely not looking for multiple houses, cars and student loans, but are instead looking for the best deal."
Shopping around for loan rates is a responsible strategy. It allows you to compare the monthly and overall costs of the loan. The FICO scoring models recognize that and let consumers evaluate multiple offers without worrying about additional hard inquiries.
However, this is not the case with credit card applications.
Why are credit card applications treated differently?
Compared to loans, credit cards provide consumers with plenty of information on their terms and conditions upfront. Most of the time, APR ranges are advertised publicly, allowing you to compare potential interest rates. Plus, when you prequalify or get preapproval for a credit card, it only triggers a soft inquiry that doesn't affect your credit scores.
You only receive a hard inquiry on your credit report when you apply for a credit card. And since the FICO scoring models assume you can responsibly compare different cards without having to ask the card issuer "please extend me credit," multiple hard inquiries signal that you're possibly overextended financially and are at risk of not making your payments. That's why each hard inquiry from a credit card application drops your score by a few points and why multiple hard inquiries within a short period can have a compounding negative effect on your score.
A note about VantageScore
Ninety percent of U.S. lenders use FICO scores, but some lenders also use VantageScore models. VantageScore models look at multiple hard inquiries a bit differently.
"Any hard inquiries that occur within 14 days of each other are considered one inquiry for scoring purposes," Ulzheimer says. "This includes credit card, mortgage, auto, student loan and any other hard inquiries."
If you're considering a few credit cards to apply for, it's best to wait at least six months between applications to protect your credit score.
Fortunately, hard inquiries don't drag down your credit score for long. While they stick around for two years on your credit report, they stop affecting your credit much sooner. "Neither FICO's nor VantageScore's credit scoring systems consider hard inquiries once they've aged past 12 months," Ulzheimer says.
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Bottom line
FICO scores, which are used in 90% of lending decisions in the U.S., may count multiple hard inquiries from loans as one — but that doesn't apply to credit card inquiries. Waiting a few months between card applications might be frustrating, especially if you're trying to rebuild your credit or eyeing a couple of exciting credit card offers, but doing so will help you avoid losing additional credit score points or getting declined.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
Quick Answer
How long should I wait for another hard inquiry? ›
Lenders typically perform a hard inquiry on your credit if you're applying for a mortgage, auto loan, credit card or student loan. Space out your credit applications — about every six months — to avoid major damage to your score.
How long should you wait in between applying for credit cards? ›
Waiting about six months between applications is a good rule of thumb and can increase your chances of approval.
Are all hard inquiries the same? ›
Depending on your unique credit history, hard inquiries could indicate different things to different lenders. Recent hard inquiries on your credit report tell a lender that you are currently shopping for new credit. This may be meaningful to a potential lender when assessing your creditworthiness.
Do you always get a hard inquiry when applying for a credit card? ›
Generally, credit card applications trigger “hard” inquiries on your credit report, which, unlike “soft” inquiries, can affect your credit score. That said, some scores go unaffected. This guide can help you get a better sense of the potential implications of a new credit card application on your score.
Is it bad to have two hard inquiries within 30 days? ›
If you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. The credit-scoring model recognizes that many consumers shop around for the best interest rates before purchasing a car or home, and that their searching may cause multiple lenders to request their credit report.
Can I apply for two credit cards in one day? ›
Yes, you can apply for two credit cards on the same day. There's no rule limiting how many credit cards you apply for. Some credit card companies have their own restrictions and will only let you apply for one of their cards within a set amount of time.
What is the 2 in 90 rule for American Express? ›
2 in 90 Rule
You can only get approved for two credit cards every 90 days. This means that if you apply for a third card within the 90-day window, you'll automatically be rejected. These rules apply to credit cards only and not charge cards, so you can apply for as many charge cards as you like.
What is the 1 in 5 rule for American Express? ›
In addition to the once-per-lifetime rule, AmEx has a couple of other rules for new cardholders. 1-in-5 rule: This states that you can only apply for one American Express card every five days. 2-in-90 rule: You can only be approved for up to two American Express cards within a 90 day period.
What is the Chase 2 90 rule? ›
If you manage to get approved for 2 personal cards on the same day, Chase will combine them into 1 hard inquiry on your credit report. If you do happen to get approved for 2 cards in the same day or month, you're probably better waiting at least 90 days before applying for another card with Chase.
If you identify an unauthorized hard inquiry, here's a detailed approach on how to remove hard inquiries in 15 minutes:
- Dispute with the Credit Bureau: Initiate a dispute online or via mail. ...
- Contact the Creditor: Engage with the lender or creditor responsible for the inquiry. ...
- Safeguard Your Credit:
Unfortunately, there are no secret ways to remove hard inquiries from your credit report unless they are there in error. If you see a hard inquiry that you did not authorize, you can file a dispute with the three reporting credit bureaus and the business that reported the information.
Should I dispute all hard inquiries? ›
Should You Remove Hard Inquiries? The idea of removing hard inquiries from your credit report to improve your credit score may sound appealing. But disputing a genuine hard inquiry on your credit report will likely not result in any change to your scores. You can, however, dispute ones that are a result of fraud.
How many inquiries are too many for Chase? ›
Hard pulls can affect your credit score and may also hurt your eligibility for new credit cards and/or loans — especially if the number of inquiries reaches six.
How long should I wait to apply for a mortgage after opening a new credit card? ›
Inquiries stay on your credit reports for two years, but FICO Scores only consider inquiries from the past twelve months—avoiding new credit applications a full year before you apply for a mortgage might be the best option if you want to maximize your scores. New credit accounts will lower your average account age.
How many credit inquiries are too many? ›
According to FICO, studies show that people with six or more hard inquiries on their credit reports can be up to eight times as likely to declare bankruptcy, compared to those with no inquiries.
Is 4 hard inquiries too many? ›
Since hard inquiries affect your credit score and what is found may even affect approval, you might be wondering: How many inquiries is too many? The answer differs from lender to lender, but most consider six total inquiries on a report at one time to be too many to gain approval for an additional credit card or loan.
How many points will my credit score increase when a hard inquiry is removed? ›
Your credit score does not go up when a hard inquiry drops off your credit report. Your score will not go down when a hard inquiry drops off, either. Instead, a hard inquiry (or hard credit pull) stops having an impact on your credit score after one year, which is one year before it drops off your credit report.
Do all hard inquiries fall off after 2 years? ›
Hard inquiries fall off of your credit reports after two years. But your credit scores may only be affected for a year, according to credit-scoring company FICO®. “Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years,” the company says.
Will my credit score go up after a hard inquiry? ›
The impact of a single hard inquiry is relatively small, usually dinging your FICO® Score five points or less. You can gain those points back over just a few months' time, however, with positive credit habits such as paying down debt and making all your payments on time.
