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How Many Credit Inquiries are Too Much in a Year

2 min 21 Sep 2023
  • Meaning of a Hard Inquiry
  • Understand How Hard Inquiries Affect Your Credit Score
  • Know the Maximum Inquiries One Can Have in a Year
  • Understanding Rate Shopping

Managing your credit effectively requires a clear understanding of credit inquiries and their influence. A credit inquiry happens when a lender or financial institution examines your credit report to evaluate your creditworthiness. In this article, we will delve into the definition of hard inquiries, their potential impact on your credit score, and establish the recommended number of hard credit inquiries per year. Additionally, we will explore the concept of rate shopping and its role in mitigating the effects of hard credit inquiries on your credit score. 

What is a Hard Inquiry?

A hard inquiry also referred to as a hard pull, takes place when you apply for credit, such as a loan, credit card, or mortgage, and a lender or financial institution accesses your credit report. This inquiry serves the purpose of providing lenders with a glimpse into your credit history, enabling them to evaluate the level of risk associated with lending to you. Here are some key points to understand about hard inquiries: 

  • A hard inquiry occurs when a lender reviews your credit report. 
  • It commonly happens when you apply for credit, including loans, credit cards, or mortgages. 
  • Hard inquiries allow lenders to assess your creditworthiness and potential risk. 
  • They provide a snapshot of your credit history, indicating how you have managed credit in the past. 
  • Hard inquiries can remain on your credit report for a period of up to two years. 
  • Although they have a temporary impact on your credit score, they are visible to lenders during this time. 

Understanding the implications of hard inquiries is vital as they play a role in shaping your credit profile. While a single hard inquiry may have a minor impact on your credit score, multiple inquiries within a short period can raise concerns for lenders. It is advisable to be selective when applying for credit and to space out applications, allowing time for your credit score to recover from each inquiry. 

How Do Hard Inquiries Impact Your Credit Score?

Hard inquiries have a transient effect on your credit score, with each inquiry typically causing a slight decrease, usually a few points. Here are some important points to understand about the impact of hard inquiries on your credit score: 

  • Hard inquiries can cause a temporary dip in your credit score. 
  • Each inquiry may result in a small decrease, reflecting the potential risk associated with seeking credit. 
  • When several hard inquiries occur within a short timeframe, it could signal active credit-seeking behaviour. 
  • Multiple inquiries may be viewed as a higher risk by lenders, as it indicates a potential increase in debt or financial strain. 
  • The impact of hard inquiries on your credit score lessens over time. 
  • As time passes, the influence of past inquiries gradually diminishes, allowing your credit score to recover. 

It's essential to note that the exact impact of hard inquiries may vary depending on individual credit profiles and overall credit history. While the initial decrease in credit score due to hard inquiries can be concerning, it is often temporary and can be managed effectively by maintaining responsible credit behaviour. By consistently making timely payments, keeping credit utilisation low, and spacing out credit applications, you can mitigate the impact of hard inquiries on your credit score and work towards maintaining a healthy credit profile. 

How Many Hard Credit Inquiries One Can Have?

Determining the precise threshold for the maximum number of hard inquiries can vary from person to person. However, it is generally advised to exercise caution and limit the number of hard inquiries on your credit report. Here are some key points to consider regarding the optimal number of hard credit inquiries: 

  • Excessive hard inquiries can have a detrimental effect on your credit score. 
  • A large number of inquiries may raise concerns among lenders, indicating a higher risk or desperate credit-seeking behaviour. 
  • It is generally recommended to keep the number of hard inquiries within a moderate range. 
  • Aim to have no more than two to three hard inquiries within a year to minimise potential negative impacts on your credit score. 
  • The impact of hard inquiries can vary based on individual credit profiles. 
  • Factors such as credit history, existing credit utilisation, and overall creditworthiness contribute to how inquiries are perceived by lenders. 

It's important to understand that these recommendations serve as a general guideline, and individual circumstances may differ. Some individuals may be able to manage a slightly higher number of inquiries without significant consequences, while others may experience a more pronounced impact. To maintain a healthy credit profile, it's advisable to be mindful of your credit applications, apply for credit only when necessary, and space out inquiries to avoid an excessive accumulation of hard inquiries on your credit report. 

How Rate Shopping Can Minimise the Impact of Hard Credit Inquiries? 

Rate shopping involves the practice of exploring multiple loan or credit offers within a limited timeframe with the intention of finding the most favourable terms and interest rates. Here are important points to understand about rate shopping and its impact on credit inquiries: 

  • Rate shopping entails actively seeking and comparing loan or credit offers to secure the most advantageous terms and rates available. 
  • It allows consumers to make informed decisions by evaluating various options before committing to a specific lender or credit product. 
  • Credit scoring models consider the necessity of rate shopping and implement measures to mitigate the impact of multiple inquiries. 
  • When rate shopping for the same type of credit within a specific timeframe, credit scoring models often treat these inquiries as a single inquiry. 
  • In India, it is typically understood that multiple inquiries made within a 30-day period for the same type of credit are treated as a single inquiry. 
  • This means that consumers can actively compare loan options without incurring excessive penalties or negative consequences for their credit inquiries. 

Rate shopping lets individuals explore loan or credit options without severe penalties. Credit scoring models recognise this responsible approach by treating multiple inquiries within a specified timeframe as a single inquiry. Consult credit bureaus or financial institutions for precise guidelines on timeframe and inquiry treatment. 


In conclusion, to maintain a healthy credit profile, it is essential to manage credit inquiries effectively. While they are important for assessing creditworthiness, excessive hard inquiries can harm your credit score. Limit the number of inquiries by being selective with applications and utilising rate shopping when appropriate. Understanding and managing credit inquiries can improve your chances of obtaining credit on favourable terms and maintaining a strong credit profile. 



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