How Many Hard Credit Inquiries Is Too Many

Updated: December 22, 2023 Author:

Quick Answer: Having too many credit inquiries can harm your credit score. As a rule of thumb, around six or more hard inquiries over a period of one to two years could be considered excessive. However, the exact number will depend on further context, and the impact of an inquiry diminishes over time.

    Understanding Hard Credit Inquiries

    A hard credit inquiry is when a financial institution checks your credit report. This usually occurs when applying for a loan or credit, and the lender wants to do a background check on the applicant.

    A hard credit inquiry indicates that you may be taking on new debt – or at the very least, you may be in need of new debt. This is different from a soft credit inquiry, which is a credit report check but without a connection to a lending decision.

    A soft inquiry doesn’t impact your credit score, but a hard inquiry may, depending on how many you have had. Furthermore, soft inquiries are not visible to other lenders whilst hard inquiries are.

    The Impact of Multiple Inquiries

    A single hard credit inquiry on its own may impact your credit score, but it doesn’t always result in a noticeable change. In other words, the impact of a single hard inquiry ranges from small to negligible. Around five points may be expected for a single inquiry, but this can vary.

    Five points may sound small, but when summed with a few others, even a 15-20 point drop may impact your future interest rates and credit approval. This will depend on how close you are already to credit score thresholds. Fortunately, the impact on your credit score may only last around a year, though it typically remains on your report for two years.

    Context matters too, and so when shopping around for a few different mortgage deals in the space of a week or so, it may be treated as a single inquiry. But, if you apply for a multiple credit cards, car finance, and mortgage, no matter the span of time, this will be considered as multiple inquiries.

    The more inquiries that are made, the greater their impact on your credit score. This isn’t always a linear impact on credit, as the impact can grow in severity if multiple inquiries are made. In other words, some of the latter hard inquiries may have a greater impact than the earlier ones, because it’s signalling growing risk – perhaps you’re accumulating more and more debt. This is particularly true if the inquiries are for different types of debt products.

    How Many is Too Many?

    As with anything related to credit scoring, universal figures are do not exist. But as a rule of thumb, six hard inquiries in a one to two year time-frame may be when your credit score may experience more significant degradation.

    Why two years? Hard inquiries will remain on your credit report for around two years, though this can vary. It’s important to remember, though, that the credit impact of an inquiry diminishes over time, and often has no impact after a year. Therefore, new inquiries can be made as the earlier ones begin to be forgotten about.

    The exact amount of inquiries depends on many different contexts. Not only the context of shopping around (sometimes multiple are treated as just one), but other factors like how many accounts the individual has and how long their credit history spans back for.

    What Factors Impact How Many Inquiries I Can Make?

    As mentioned, the exact number of inquiries you can make before your credit score is seriously harmed can vary based on many factors. 

    Before looking at these factors, it’s worth noting that the lending product attached to the hard inquiry isn’t too relevant. In other words, a hard inquiry for a payday loan and one for a mortgage are treated similarly. 

    Here are some of the key ones to consider:

    • Credit History: For individuals with a short credit history, a hard inquiry makes up a larger proportion of their credit score. With less credit goodwill “in the bank”, each new hard inquiry poses a greater risk and tells a bigger part of your credit story.
    • Credit Type: As previously mentioned, hard inquiries are attached to a lending product. Therefore, several inquiries made in a short period of time for one single product, such as financing a car, is often treated as a single inquiry. This “shopping around” benefit is often lost once the inquiries are attached to varying types of credit or in various product industries.
    • Credit Utilisation: If you are currently using a large proportion of the credit that you have available, an inquiry off the back of this may suggest you’re experiencing financial problems. Therefore, your credit utilisation ratio becomes an important piece of context for credit agencies.
    • Other Credit Activity: Inquiries aren’t the only activity that credit agencies are looking at. If you’ve been recently approved for several lines of credit, additional inquiries may signal that you’re over leveraging. 

    Minimising the Impact and Key Considerations

    Here are some key considerations in order to minimise the impact on your credit score when undergoing multiple hard inquiries:

    • Thresholds: Check your credit score and see if it’s near credit score thresholds. You may only be 10 points from going from a ‘good’ to ‘fair’ credit score in the eyes of certain scoring models or products. This will help inform how many hard inquiries you may want to make.
    • Strategic Applications: Be strategic about your applications for credit. Not just whether they’re necessary and in keeping credit utilisation low, but in keeping them the same type (industry-specific and credit type) where possible to indicate you’re “shopping around”. 
    • Timeframe: Keep in mind the two-year timeframe, even if it isn’t definite. Keep track of your hard inquiries, their dates, and try to avoid breaking the rule of thumb.
    • Prioritise: It’s important to prioritise your applications, where the more important inquiries are made first. This is to minimise the impact that any decrease in credit score may have on you regarding multiple inquiries.

    Final Thoughts on How Many Inquiries 

    Definite rules are difficult to lay out in credit scoring, but making five to ten hard inquiries in a one to two-year span may be considered excessive by credit agencies. Generally, those with a short credit history and high credit utilisation ratio will have fewer inquiries before they become significantly damaging. 

    The impact of a hard inquiry diminishes over time. Because of this, it’s important to be strategic in your inquiries, prioritise them, and keep an eye on both the timeframe and credit thresholds. As the impact of inquiries fade over time, building your credit score can help offset the impact.