If you apply for credit from a bank or business that offers credit, an inquiry will be reported on your report. This is known as a hard pull credit inquiry. A soft pull inquiry is if your report is pulled by an institution that does not offer credit. Institutions that can perform a soft inquiry include: employers, non-lenders, government agencies, or yourself. Every time a lender pulls your credit report, it can have a negative impact on your score(s) of up to 3-5 points. Inquiries from lending institutions are listed on the credit report for 2 years.

If you’re applying for a mortgage, student loan, or car loan, the inquiry shouldn’t affect your credit score for 30 days. Also, mortgage, student loan, or auto loan inquiries within a 45-day period are only supposed to count as individual inquiries. These exceptions allow people to shop around for the best credit rates and terms without being penalized. Inquiries for all other types of credit, such as: department store cards, bank credit cards, gas cards, and personal loan inquiries, are counted in your score(s) instantly.

You are entitled to one free credit report annually from the 3 major credit bureaus (TransUnion, Equifax, and Experian). You can request the free report online at annualcreditreport.com. According to government guidelines, everyone is entitled to one free credit report a year from each of the major credit reporting agencies. After you receive your free copy of your report, please review it carefully for errors, inaccuracies, unauthorized inquiries, or any listed debts you did not request. Also, check for any authorized user accounts that you no longer want to be associated with, possibly from a former spouse or parent.

Below is the basic calculation to determine a credit score. Ten percent of a credit score is determined by the number of credit inquiries a person has made in the last 12 months. Fifteen percent of a credit score is determined by the length of time or the number of payments you have on your credit history. Because of this factor, it is usually beneficial to keep open accounts that have been paid as agreed. If you close an account, good payment history will no longer count toward your credit score. Ten percent of the credit score is determined by the combination of credit that is opened. A consumer’s ability to repay a variety of installment and revolving loans is considered a better risk than a consumer with less experience. Thirty-five percent of the score is determined by payment history. Recent late payments have a greater detrimental impact than old late payments. The remaining 30% of the score calculation is determined by the percentage of credit used by the consumer. It is beneficial to keep balances in revolving accounts below 50 or even 30% of your available balances.