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Your credit score is very important, particularly if you’re looking to apply for a loan or credit card. Of the many factors that influence your score, credit inquiries are the ones that are so often misunderstood. We lay out a few common myths about credit inquiries and explain the truth about them.

Myth: There is One Type of a Credit Inquiry, and It Always Effects Your Credit

Fact: There are two types of credit inquiries: soft inquiries and hard inquiries. A soft inquiry, or soft pull, happens when you check your own report for educational purposes. This is the type you do with a credit education website like QLCredit. No matter how many times you do a soft inquiry on your credit, it will never hurt your score, and it won’t show on your report.

A hard inquiry, or hard pull, occurs when lenders check your report in the lending process, such as when you’re applying for a mortgage or getting a credit card. Hard inquiries can hurt your score by a few points and will remain on your report for two years. They also require your authorization, so no one should be doing a hard pull on your credit without your consent.

Myth: Hard Inquiries Negatively Affect Your Credit Score by a Lot

Fact: Hard inquiries affect your credit score, but not as much as most people think. The exact amount of points isn’t known for sure, as a complex mathematical formula is used to determine the exact amount of points that are deducted. However, most hard inquiries will dock three to five points from your score. This is only temporary, and your score should recover fairly quickly.

Myth: Shopping Around for a Loan Hurts Your Score

Fact: Too many hard inquires will negatively impact your score, but if you’re shopping around for a loan and your credit is pulled multiple times in a 14-day window, the credit bureaus will only count it as one hard inquiry. This allows you to get credit pulls from multiple lenders while protecting your score from most of those negative marks.

When you’re ready to get a mortgage, you can speak with a Home Loan Expert to see how your credit score will affect your mortgage rate.

Myth: Declaring Bankruptcy Gives You a Clean Slate of Credit

Fact: Declaring bankruptcy does not clear your credit and will severely hurt your score for many years to come. A Chapter 13 bankruptcy can stay on your credit report for up to seven years, while a Chapter 7 bankruptcy can stay on for up to 10 years. Filing for bankruptcy should be a last resort, as it has many implications to your financial health.

Myth: Paying Off Past Debts Will Instantly Help Your Credit

Fact: If you’ve had late payments or debt go into collections in the past, paying them now is good, but it won’t instantly help your credit. Your credit report is the history of payments, not a glimpse of your current credit, so it’ll take into account your late payments. Your score will also still be impacted by this debt. Similarly, any future payments you miss will affect your credit score even if you pay off the debt in full.

Myth: I Pay My Bills on Time; I Do Not Need to Check My Credit Score

Fact: You should check your credit report and score regularly, regardless of whether you pay your bills on time. While a lot of your score is based on your payment history (nearly 35%), your score is still influenced by many factors, such as hard inquiries, age of credit, credit utilization and type of accounts you have open, which influences the other 65% of your score.

Similarly, you want to regularly check for any errors that may have come up. Sometimes good accounts like mortgages aren’t reported, and other times, unauthorized accounts or someone else’s information can be reported in your name. It’s important to check for these and make sure your information is correct and that there are no instances of fraud.

Myth: All Credit Reports Are the Same

Fact: There are three major credit bureaus: TransUnion, Equifax and Experian. Each bureau offers their own credit report based on their own scoring methods. Technically, the information on each of these credit reports should be the same, but it’s not always. Companies that you have loans or credit cards with may not always report to all three bureaus.

To see your TransUnion credit report for free, you can check out QLCredit. If you’d like to see your Equifax or Experian credit reports, you can visit AnnualCreditReport.com for a free copy of each.

Myth: Bad News Comes Off in Seven to 10 Years

Fact: Most bad news comes off in seven to 10 years. Chapter 13 bankruptcy comes off your credit seven years after the filing date, and a Chapter 7 bankruptcy (exoneration of all your debt) stays on your credit for 10 years. There are other forms of bad news, such as late payments, that also stay on your report for up to seven years.

It’s important to note that not all bad marks are created equally. While a late payment will still show up on your report for seven years, it will not impact your score as much as a bankruptcy or foreclosure will. Even if you miss one or two payments, it’s important for you to get back on track before one or two turns into a bankruptcy.

Your credit is vital to your financial health. It determines so much for your financial life like the ability to get a loan and the interest rates you pay on them, so it’s important to understand what impacts your score. With the right knowledge, you can make good choices about your finances and take the steps necessary to maintain a solid credit score.

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This Post Has 12 Comments

  1. Quicken loans did the same thing to me, I ask the guy to not run my credit because I was going away for about a month, I will pick up where I left off when I return he run my credit anyway, Quicken loan SUCKS, I will not recommend them to anyone..

    1. Hi Mitch:

      I’m sorry to hear this experience with us. I’m going to get this over to our client relations team so we can have someone look into it.

      Thanks,
      Kevin Graham

  2. Quicken did an amazing job for me in getting my mortgage % dropped significantly. I went from a 30 year loan to a 20 year loan & my monthly payment actually went down. If dropping your score by 13 points is going to keep you from getting a home loan them perhaps you aren’t financially ready to own one.

    1. Hi Susan:

      I’m glad we were able to help you and that you’re so happy! With that being said, we absolutely want to make sure everyone is ready to buy a home in their own time. This is the case whether it’s a credit issue or any other reason.

      Thanks,
      Kevin

  3. This information in inaccurate, I just checked my credit and the only thing I have on my report are Hard Pulls. The information given here says that they will stay on your report for 6 months. There are several that are scheduled for 2 years. I had a few credit unions competing for my business, new car, and they have been on the report for over a year and are scheduled to come off in another year.

    1. Hi Dave,

      You would only see hard pulls because soft pulls don’t show up on all credit reports. It depends on the bureau. Also, the post is not saying that a credit pull only stays on your credit report for six months. Rather, it says it affects your credit score by five points for six months as an example. I hope this clears up any confusion.

      Thanks,
      Kevin Graham

  4. Just called to get some info about getting preapproved for a mortage and the woman needed to check my credit, she said it would only affect my score little to non, in under 8 hours I got a notification saying they did a hard inquiry and my score went down 13 points!!! Now how am I gonna get a mortgage??? I’m pissed and now I have to raise hell to fix this. I DON’T RECOMMEND QUICKEN LOANS AT ALL! THEY ARE SCAMMERS

      1. Hi Sherae:

        I’m sorry to hear you’re having a poor experience. We’ll be happy to look into this for you and see what we can do to turn it around. I’m going to get this to our client relations team who will be in contact.

        Thanks,
        Kevin Graham

  5. Steven, I had the exact same thing happen, they assured me that this was a soft pull and not a hard check. When i called back i was told I was lying, then I played the recorded audio for them since I record all of my calls and the lady got really mad and hung up on me because she said I didn’t have her permission to record her.

  6. I called Quicken to get more information about a loan, and without my authorization, they did a “hard pull” of my credit. It did in-fact lower my credit score; for that reason, I will never use or suggest quicken to any of my associates or friends.

  7. The inquiry thing kinda pisses me off though. There’s no reason I should be penalized for how much my credit is checked, it should only count for how often I actually open a new account or something.

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