Are Hard Inquiries Considered Derogatory?

worried looking man pouring over finances sitting next to small child
Dear Experian,

Are inquiries on my credit report considered derogatory?


Dear EKJ,

Inquiries are not considered derogatory—in fact, they are neither positive nor negative. They are simply a record that your credit report has been accessed. Inquiries resulting from your application for credit can have a small impact on credit scores simply because they represent potential new debt that doesn't appear as a credit account on your report, yet.

There are two types of inquiries listed on your credit report: hard inquiries and soft inquiries. Both remain on your report for two years, but only hard inquiries can affect your credit. Soft inquiries, which are typically made when you check your own credit or when a lender preapproves you for offers, have no impact on your credit scores.

The Difference Between Hard and Soft Inquiries

Hard inquiries are typically the result of an application for credit or services. Although they may have some effect on your credit scores, any impact is usually minimal and temporary. For example, an inquiry for a new account you applied for may lower your scores a few points, in part because it represents the possibility of a new account on your credit report. Once the new account is reported and it shows that you are managing your account well, your credit scores will typically bounce back up.

And, while a single hard inquiry may cause your credit scores to dip slightly (FICO says an inquiry usually lowers scores less than five points), that impact diminishes over time. Many credit scoring models, including FICO® Scores , do not consider inquiries once they are more than a year old.

Soft inquiries, on the other hand, have no impact at all on your credit scores. These are most often the result of preapproved offers that are sent to you or an account review by a company with whom you already do business. For example, your credit card provider or mortgage lender can review your credit history periodically as part of their account management process, but this "credit pull" does not affect your credit scores.

What to Do if There Is an Inquiry You Don't Recognize

Sometimes, the name a company uses when it accesses your credit report may differ from the name you know them by. Businesses can use an abbreviated form of their name or may appear as the parent company or the finance company that services their accounts. For instance, if you have a retail store card, it may appear on your report under the name of the bank that services the account, rather than the name of the store where you do your shopping.

And, because the soft inquiry section of your credit history often includes the names of businesses that have sent you preapproved offers but with whom you do not do business, you may not recognize those names either.

If you see the name of a business you do not recognize listed under the hard inquiry section, you can often determine what the inquiry was related to by looking back at credit products you applied for during that time period. You can also directly contact the business listed to ask for more information to try to determine why they requested your credit report.

Keep in mind that an application for a home or car loan may result in several inquiries from different finance companies. That's because the car dealer or mortgage broker will typically send out your application to multiple lenders in order to secure the lowest rate and best terms. In addition, you may be doing your own rate shopping with different lenders.

As long as these inquiries occur within a short period of time (anywhere from 14 to 45 days), they will be counted as one for credit scoring purposes. This is done to give you the ability to shop around for the best deal on a house or car without being penalized. You may not know about each individual business that accessed your credit history for this purpose, and that's OK.

What if the Inquiry Is Due to Fraud?

In some cases, an inquiry you don't recognize may be a sign of someone attempting to commit credit fraud after stealing your identity. If you have a hard inquiry on your credit report you do not recognize, and you believe it is the result of someone fraudulently trying to apply for credit in your name, you should notify the business who made the inquiry and contact Experian to dispute the information.

You can request that a security alert be added to your credit report by visiting Experian's online Fraud Alert Center. You can also use the online Dispute Center to request an investigation. Experian will contact the company and notify them that you believe the inquiry is due to identity theft. If you prefer, you can also submit disputes by mail or by calling the number listed on your credit report.

Thanks for asking.
Jennifer White, Consumer Education Specialist