Quick takeaway

Most hard inquiries lower a credit score by only a few points for most consumers, and their effect fades after six months. You can keep inquiry-related damage minimal by prequalifying (soft pulls), grouping formal applications into a short window, and fixing errors on your credit report first (CFPB; myFICO).

Why hard inquiries matter—and how big the effect usually is

  • A hard inquiry happens when a lender pulls your credit to make a lending decision. It typically appears on your credit reports for two years and can modestly lower scores—often by a few points—though the practical impact usually lasts about 6–12 months (Consumer Financial Protection Bureau).
  • Scoring models recognize rate shopping: many FICO versions treat multiple mortgage or auto inquiries within a short period (commonly 14–45 days, depending on the model) as a single inquiry to avoid penalizing shoppers (myFICO).

Prequalification vs. hard inquiry: use prequalify first

  • Prequalification or pre-screening usually uses a soft inquiry that won’t hurt your score and gives you a rate estimate. Always ask whether the lender’s prequalification is a soft or hard pull before you submit an application. The CFPB and lenders typically note this during the prequal process.

Practical step-by-step loan-shopping strategy (what I use with clients)

  1. Check your credit reports and scores first. Fix errors, bring balances down if you can, and note recent limits or new accounts that could change pricing. You can get free annual reports at AnnualCreditReport.com and use the CFPB guidance to interpret inquiries.
  2. Prequalify widely. Get soft‑pull estimates from several lenders to compare rates and fees without impacting your score.
  3. Narrow to 2–4 lenders that offer the best preliminary terms. Ask each whether they use a soft or hard inquiry to generate a final offer.
  4. Time formal applications inside a single rate‑shopping window. For mortgages and auto loans, aim to submit required credit pulls within the same short period (commonly 14–45 days depending on the scoring model). For personal loans and credit cards, keep applications focused and avoid mass applying. This reduces compounding inquiry effects (myFICO).
  5. Read total cost, not just rate. Compare APR, fees, prepayment penalties, and customer service. A slightly higher rate with no fees can cost less over time.

Example from practice

A client wanted a mortgage refinance and initially planned five separate applications over two months. I recommended prequalifying with several lenders, then submitting credit applications within a single 30‑day span. The result: only a small scoring dip and better competing offers—saving thousands in interest.

Common mistakes to avoid

  • Applying to many lenders over long stretches. Each hard pull can add up, and scattered timing prevents rate‑shopping protections.
  • Skipping prequalification. You miss free rate information and risk unnecessary hard pulls.
  • Ignoring fees and terms. Low headline rates sometimes hide high fees.

When the impact is larger than expected

Borrowers with very thin or new credit files can see a larger score swing from a single inquiry. If you’re near a rate breakpoint (e.g., a score that changes pricing tiers), plan carefully: improve the file first or get stronger prequal offers before any hard pulls.

Helpful internal resources

Authoritative sources

Professional note and disclaimer

In my practice advising borrowers, a short, disciplined shopping window plus thorough prequalification has been the simplest way to protect scores while getting competitive offers. This article is educational and not personalized financial advice. For decisions tied to your unique tax, credit, or legal situation, consult a certified financial professional or credit counselor.