How Many Hard Inquiries Are Too Many for a Bank

How many hard inquiries are normal: is there a limit?

A hard inquiry is a trace left by a credit application: a bank checked your history, and a new line showed up on your report. We covered how it differs from a “soft” inquiry and where to find it in our article “What Is a Hard Inquiry and How to Check Them on Your Credit Report”. Here we answer a different question: how many hard inquiries are normal, and at what number banks start saying no.

There is no single limit: nobody officially says “no more than five.” Every bank keeps its rules secret. One inquiry is barely noticeable: your score usually loses just a few points. Trouble starts when inquiries come one after another.

But there are rough guidelines. In the experience of Excalibur Credit Solutions, banks look at inquiries from the last six months roughly like this:

• 0–2 inquiries: no problem. That's normal life: you got a car, you opened a card.
• 3–4 inquiries: the bank will take a closer look. You may still get approved, but with a lower limit, or they may ask you to prove your income.
• 5 or more: frequent denials. The bank thinks: this person urgently needs money and has probably been turned down elsewhere already.

How does FICO look at inquiries, and how does a real bank?

Your inquiries get checked twice. The first time, by the program that calculates your credit score. Most often that is FICO, the score formula banks use the most. In it, new credit makes up 10%, and inquiries are only part of that 10%. Only inquiries from the last 12 months count.

The second time, by the bank itself: its system and real people. They see all inquiries from the last 24 months on your report. And they count them by their own rules: how many in 3 months, how many in six months, how many new accounts were opened. A new account is any recently opened card or loan. That's why this happens: a score of 740, but a card denial with the note “too many recent inquiries.”

Why is every credit card application a separate inquiry?

When you shop for a car, you end up taking one, even if you asked five banks. Cards are different: each application can turn into a separate card with its own limit. Five applications could mean five new debts. That's why FICO does not combine card inquiries, even if they were all made on the same day.

Banks also count new accounts. The best-known example is Chase's “5/24” rule. The bank does not publish it officially. Based on cardholders' experience, it works like this: 5 or more new cards in two years at any banks, and Chase usually says no. Yulia's two new credit cards would count toward those five. Other reasons for denial are in our article “Why Banks Deny Credit Card Applications”.

This gives you a simple rule: no more than one card application every 3–6 months. Check your chances before you apply: many banks offer pre-qualification on their website, which is a preliminary check. The bank does a soft inquiry there, and your score does not change.

Cars and mortgages: how many applications can you make without hurting your score?

With big loans, it works the other way around. The score formula understands that you are comparing rates and will end up taking one loan. That's why auto loan, mortgage or student loan applications made within a short period count as one inquiry. This period is called the rate shopping window.

How long the window is depends on the score version. Newer FICO versions use 45 days. Older ones use 14 days, and they are still often used for mortgages. VantageScore also uses 14 days. Nobody will tell you which version the bank is looking at. So there is one rule: fit all your applications into 14 days.

There is a trap with cars. The dealer often sends your application to several banks at once. And if you spend a month going from one dealership to another, the window closes, and the inquiries won't be combined anymore. How to come to the dealer prepared is covered in our article “Car Loans in the US: What You Need to Know”.

Why are high-limit banks stricter about inquiries?

The higher the limit, the more the bank risks: a $500 card and a $20,000 card are very different decisions. That's why these banks look especially closely at recent inquiries and new accounts.

Based on cardholders' experience, Chase, Citi and Wells Fargo don't like it when someone opens several cards quickly. With Citi, it's better not to apply right after applying at other banks. Bank of America and American Express also have their own limits on the number of new cards. Details on each are in our guide “Top 5 banks with high limits”.

High-limit banks: a string of applications stands out here

A typical case from Excalibur Credit Solutions' practice: a good score and good income, but the limit was $1,000 instead of the expected $10,000. The reason was three or four applications in the couple of months before that. Want a card with a high limit? Apply at a bank like that when you have 0–2 inquiries in six months and no new cards.

How do you plan your applications a year ahead?

A simple plan helps.

1. Write down all your goals for the next 12 months. A mortgage, a car, a card, home repairs on a payment plan: anything that needs credit.
2. Put your biggest goal at the center. If it's a mortgage, make no new applications for 6–12 months before it.
3. Space out your cards. Wait at least 3–6 months between credit card applications.
4. Fit car and mortgage applications into 14 days. Gather your documents in advance.
5. Apply only where your chances are high. Pre-qualification first, then the application: a denial also leaves an inquiry on your report.
6. Check your report once a month. You'll spot extra and unfamiliar inquiries right away, not the day before a deal.

Let's go back to Yulia. If she turns down the store card and doesn't open anything else, here is what things will look like by the time she applies for the mortgage:

• The car loan and phone inquiries will be 13–14 months old, so FICO no longer counts them.
• The inquiries for the two credit cards will be 9–12 months old. They still count, but two inquiries in a year is the safe zone.
• There won't be a single new inquiry in the six months before the mortgage. The underwriter, the bank employee who reviews a mortgage application, usually asks for a written explanation of every inquiry from the last 3–4 months. Yulia will have nothing to explain.

But with the store card, Yulia would have 5 inquiries in six months right now, which is the zone of frequent denials. Plus a third new account in 3 months. Now a hypothetical calculation. Let's say that because of this, her score ends up a little lower by mortgage time than she needs for the best rate. Even a 0.25% difference on a $300,000 loan for 30 years is about $50 a month. Over the full term, that's roughly $17,900. A $270 discount is not worth that. What else gets checked before a mortgage is in our guide “What the underwriter looks at”.

What if you already have a lot of hard inquiries?

Already have 5, 7 or 10 inquiries? Don't panic. A hard inquiry is not a late payment and not a collection (a debt that was handed over to collectors). It's one of the lightest entries on your report, and it fades on its own over time.

1. Stop. No new applications for at least six months. Every attempt is a new inquiry and, most likely, a new denial.
2. Check that all the inquiries are yours. See a company you never applied to and never allowed to check your credit? You can dispute that inquiry: the bureau is required to check the disputed entry. Our short guide to inquiries made without consent shows how to tell such an inquiry from a legitimate one. But you can't dispute inquiries from your own applications.
3. Work on what matters more than inquiries. Make every payment on time. Keep the balance on each card below 30% of its limit, ideally below 10%.
4. If you need credit urgently, go where you've been a customer for a long time: your own bank or a credit union. A credit union is like a bank, but it is owned by its customers. They already know you there.
5. Give it time. After 12 months, FICO will stop counting today's inquiries, and after 24 they will disappear from your report.

Excalibur managers start by listing every inquiry with its date for each of the three bureaus. You can see right away which ones will soon stop affecting your score and which ones raise questions. Found an inquiry that isn't yours? You can dispute it with the bureau yourself, for free. No time for letters? We'll handle the correspondence.