How long does a hard inquiry typically affect a credit score?

• A. It lasts for one month
• B. It usually impacts the score for 5 years
• C. It may impact the score for about 12 months
• D. It is a permanent factor on the score

Answer: (C)

A hard inquiry typically impacts a credit score for about 12 months. When a lender checks your credit report as a part of the loan application process, that is considered a hard inquiry. While it can have a short-term negative effect on your score, this effect diminishes over time, and the inquiry generally falls off your credit report after two years. However, the most significant impact on your score is usually felt within the first year, which is why the duration of about 12 months is accurate.

Understanding the impact of hard inquiries is crucial for consumers. Too many hard inquiries in a short period can indicate to lenders that a borrower may be taking on too much debt, which can further affect lending decisions. Therefore, it's advisable for borrowers to be mindful of the number of credit applications they submit over time.