How much will a credit pull drop your credit score?
How much will a credit pull drop your credit score?
People ask us if by us pulling their credit, if it’s going to drop their credit score. And the short answer is no, or actually more accurately, very little and very short term.
Where it really affects your credit is if you have your credit pulled for multiple reasons over a short period of time.
What we’ve heard from the credit models, and they don’t publish this stuff, is that more than one credit pull within 30 days for a different reason can have a detrimental effect on your credit score. The reason why I say ‘no’ – me pulling your credit, it doesn’t drop your credit score- is because that credit pull itself is not going to generate a lower credit score.
That score is what it is.
It’s the next pull in a short period of time that may be lower. If you apply for a mortgage and then next week you apply for a credit card. And then the week after that, you apply for an auto loan, that’s an example of a scenario where your credit score may go down because the credit bureaus look at that as risky behavior.
They know that in a normal part of life, people are going to apply for credit from time to time. That’s why the scoring model allows for some credit pulls without it affecting your credit score. But the red flag is those multiple pulls over a short period of time. So if you have just one person pull your credit, like for a mortgage lender pulling your credit, that’s not going to bring your score down in and of itself, and your score is going to recover very quickly as far as the next credit poll goes.
So if you wait another 30 or 45 days before you apply for that auto loan, it’s unlikely your score is going to be lower because of that previous credit pull. Now, one thing to that I want you to know is that if you’re out there shopping for something, whether it’s a mortgage, auto loan, whatever it is, multiple pulls in a short period of time, over the course of 14 days for the same reason only count as one credit pull in the eyes of the credit bureaus. So they want to encourage people to do shop around at different creditors, to take a look at what different creditors have to offer. And they don’t penalize you for that kind of activity. It’s credit pulls for different reasons, over a short period of time.
The final thing that I want to inform you about is that if your credit score is lower, those multiple credit pulls are going to have a more detrimental effect on your credit score. If your credit score is higher, it’s going to have less of a detrimental effect because you have a history of paying your bills. Whereas with a lower credit score, that’s looked at as an even higher red flag if you have those multiple credit pulls over a short period of time. So I hope that helps clear it up. Give me a call if you have a question about your specific scenario, because it can be a little bit confusing and complicated, and I’m happy to talk that out with you and talk about any other credit related questions.
