Is a Hard Inquiry Really Only Worth a Few Points?

You've probably heard this a million times: "Don't worry about hard inquiries - they only drop your score by a few points, maybe 5 at most." I believed this for years until I started actually paying attention to what was happening to real people's scores. Turns out this "common knowledge" is complete BS for a lot of situations.

Your credit file matters more than you think

The whole "few points" thing assumes everyone's credit looks the same. Spoiler alert: it doesn't.

If you're new to credit: Holy crap, inquiries hit hard. I'm talking 21+ points on a single inquiry. Yeah, you read that right - twenty-one points, not five. This has been tested over and over on new files, and it's consistent. The crazy part? You don't get those points back gradually. You wait a full year, and then BAM - all 21 points come back at once when the inquiry stops counting.

If your credit is already messed up: Inquiries can still pack a punch. People with existing negative marks often see double-digit drops from inquiries. It's like kicking someone when they're already down - FICO seems to punish you more when you're already struggling.

This advice is old and outdated: The "few points" rule comes from older FICO scoring models that worked differently. The mortgage scores (FICO 2, 4, and 5) are notoriously harsh on inquiries compared to the regular FICO 8 most people talk about.

Sometimes inquiries don't hurt at all

Here's where it gets weird - sometimes you can get a hard inquiry and your score doesn't budge. This happens because of something called "inquiry binning."

Think of it like tax brackets, but for inquiries. Maybe 0-2 inquiries put you in one bucket, 3-4 in another, and so on. If you're already at 3 inquiries and get a 4th, you might not see any score change because you're still in the same "bucket." But that 5th inquiry that bumps you to the next level? That one's gonna hurt.

There's also apparently a cap somewhere around 14 inquiries where FICO just stops caring. At that point, what's one more inquiry when you already look like you're desperately shopping for credit everywhere?

What really happens in the real world

Instead of this mythical "few points," here's what actually happens: inquiries can cost you anywhere from 0 to 21+ points on FICO 8, depending on your situation.

One person tracked their scores and saw 7-point drops from single inquiries on their "very dirty" credit file. They were sitting in the mid-600s with 4 inquiries in 6 months, so they weren't exactly in pristine credit territory.

A credit expert figured out how to test this stuff properly:

• Check your score right before applying for credit
• Check it again right after the inquiry hits
• Check it again just before the one-year mark and right after to see the points come back

The timing gets tricky because accounts and inquiries age differently for scoring purposes, but this method lets you isolate exactly what each inquiry is doing to your score.

The bottom line

Look, if you've got great credit with a thick file and low inquiries, yeah, one more might only cost you a few points. But if you're new to credit, rebuilding, or already have several inquiries, that next one could be a lot more expensive than you think.

The credit industry loves to downplay inquiry impact because they want you to keep applying for their products. Don't fall for the "it's only a few points" line without considering where your credit actually stands.

Before you apply for that store card to save 10% on your purchase, maybe check if you're someone who's going to lose 20+ points for the privilege.