Credit inquiries are a part of the process of applying for any type of financing, whether it be a mortgage, credit card, or personal loan. When you apply for financing, the lender will pull your credit report to assess your creditworthiness. This process involves making a credit inquiry.
There are two types of credit inquiries: soft inquiries and hard inquiries.
**Soft inquiries** are made when you apply for pre-approval for a loan or credit card, or when you check your own credit score. Soft inquiries do not affect your credit score.
**Hard inquiries** are made when you formally apply for a loan or credit card. Hard inquiries can stay on your credit report for up to two years, and they can affect your credit score.
It’s important to be aware of the difference between soft and hard inquiries so that you can make informed decisions about when to apply for financing. If you’re not sure whether an inquiry will be a soft or hard inquiry, you can always ask the lender.
What Are Soft and Hard Credit Inquiries?
You may have heard the terms “soft credit inquiries” and “hard credit inquiries” when applying for a loan or credit card. But what exactly do these terms mean, and how do they affect your credit score? Let’s dive into the differences between soft and hard credit inquiries and their impact on your financial well-being.
Soft Credit Inquiries
Soft credit inquiries are typically conducted when you check your own credit report, apply for a job, or prequalify for a loan or credit card. These inquiries are made without your consent, and they do not affect your credit score. Lenders and creditors may use soft inquiries to get a general idea of your creditworthiness, but they do not impact your credit score. You can check your credit report as many times as you want without worrying about damaging your credit.
Soft inquiries are like a quick glance at your credit history. They can be compared to checking your bank statement online or reviewing your utility bills. Just as these actions do not affect your overall financial standing, soft inquiries do not have any negative impact on your creditworthiness.
However, it’s important to note that some websites and services claim to offer “free credit reports” or “credit monitoring” without requiring a hard inquiry. These services often use soft inquiries, which can provide you with a snapshot of your credit information. However, they may not be as comprehensive as a true credit report obtained directly from a credit bureau. Be sure to read the fine print before signing up for these services, as some may charge fees or impact your credit score with hard inquiries.
What Are Soft and Hard Credit Inquiries?
Credit inquiries can be categorized as either soft or hard. Soft inquiries don’t have a negative impact on your credit score, while hard inquiries can. So, if you’re trying to maintain a stellar credit score, it’s important to understand the difference between the two.
Soft Credit Inquiries
When you check your credit report or when a potential creditor does a “soft pull” of your credit to prequalify you for a loan, such as when you apply for a credit card or a mortgage, it’s considered a soft inquiry.
These inquiries don’t affect your credit score because they don’t require a full credit check. Instead, they simply give creditors a snapshot of your credit history. This allows them to make a preliminary decision about whether or not to approve your application. Soft inquiries are also used by employers, insurance companies, and landlords to assess your creditworthiness.
If you’re concerned about your credit score, you can request a free copy of your credit report from each of the three major credit bureaus once per year. You can also sign up for credit monitoring services that will alert you to any changes in your credit report, including soft inquiries. This can help you keep track of who’s been checking your credit and make sure that no unauthorized inquiries are being made.
Hard Credit Inquiries
A hard credit inquiry occurs when a creditor pulls your credit report for the purpose of making a final decision about whether or not to approve your application for credit. These inquiries are recorded on your credit report and can stay there for up to two years. Multiple hard inquiries in a short period of time can lower your credit score.
Hard credit inquiries are typically only made when you’re applying for a new line of credit, such as a credit card, a loan, or a mortgage. If you’re only window-shopping for credit cards or loans, it’s best to avoid applying for multiple accounts at once. Otherwise, you could end up with several hard inquiries on your credit report, which could damage your score.
If you’re not sure whether an inquiry on your credit report is a soft inquiry or a hard inquiry, you can contact the creditor directly. They can tell you what type of inquiry it was and why it was made.
Knowing the difference between soft and hard credit inquiries can help you protect your credit score. By limiting the number of hard inquiries on your report, you can keep your credit score healthy and make it easier to qualify for the best interest rates and credit terms.
What Are Soft and Hard Credit Inquiries?
Googling for a new apartment or car loan? Brace yourself for credit checks! Lenders and creditors will scrutinize your credit report, poking and prodding into your financial history. But hold your horses, there are two sides to this credit inquiry coin: soft and hard. Let’s dive into the nitty-gritty to understand the difference.
Hard Credit Inquiries
When you formally apply for a loan, credit card, or other lines of credit, lenders will typically make a hard credit inquiry. It’s like giving them a peek under the hood of your financial engine. These inquiries leave a temporary mark on your credit report, like a digital scar, for about two years.
Multiple hard inquiries in a short period can raise a red flag for lenders. It’s like applying for a dozen jobs at once – employers might wonder if you’re desperate or hiding something. So, think twice before going on a credit inquiry spree.
Soft Credit Inquiries
Soft credit inquiries, on the other hand, are like harmless little gnats buzzing around your credit report. They’re made when you check your own credit score, get pre-approved for offers, or when creditors review your account activity. Soft inquiries don’t leave a trace on your credit report and don’t affect your credit score.
So, remember, hard inquiries are like a doctor’s examination, leaving a brief mark. Soft inquiries are more like those annoying phone calls from telemarketers, leaving no lasting impact.
