A hard inquiry is a request by a lender to access your credit report. It happens when you apply for a loan, credit card, or other form of credit. Hard inquiries can have a small impact on your CIBIL score, but the effect is usually temporary.
The impact of a hard inquiry on your CIBIL score depends on a few factors, including:
- The number of hard inquiries: The more hard inquiries you have, the more it will affect your score.
- The time frame in which the hard inquiries occur: Multiple hard inquiries within a short period of time will have a greater impact on your score than those that are spaced out over a longer period of time.
- Your overall credit history: If you have a good credit history with a long payment history, a few hard inquiries will not have a significant impact on your score.
According to CIBIL, a single hard inquiry can lower your score by 5 to 10 points. However, the impact of multiple hard inquiries can be more significant. For example, if you have 4 hard inquiries within 6 months, your score could be lowered by 20 to 30 points.
There are a few things you can do to minimize the impact of hard inquiries on your CIBIL score:
- Only apply for credit when you really need it.
- Space out your applications for credit. If you are planning to apply for multiple loans or credit cards, space out your applications over a period of several weeks or months.
- Check your credit report regularly. This will help you identify any hard inquiries that you did not authorize.
If you have a lot of hard inquiries on your credit report, there are a few things you can do to improve your score:
- Pay your bills on time. This is the most important factor in determining your credit score.
- Increase the amount of credit you have available. This will lower your credit utilization ratio, which is another important factor in your credit score.
- Wait for the hard inquiries to fall off your credit report. Hard inquiries typically stay on your credit report for 2 years.
By following these tips, you can minimize the impact of hard inquiries on your CIBIL score and improve your chances of getting approved for credit.
If you are concerned about the impact of hard enquiries on your CIBIL score, you can talk to a credit counselor. They can help you understand your credit report and develop a plan to improve your score.