Hard vs Soft Inquiry Credit Score

What is a Hard Credit Inquiry? 

A hard inquiry occurs when a lender reviews your credit report to assess your eligibility for a loan, credit card, or line of credit. Depending on the lender, one or more reports may be checked from Experian, TransUnion, or Equifax.

When Can You Receive a Hard Credit Inquiry?

You can expect hard credit inquires under the below-mentioned scenarios:

1. While applying for a new credit card.

1. Buying or leasing a car

1. Applying for a mortgage

1. Personal loan applications require a hard credit pull.

1. Applying for private or PLUS student loans

1. Requesting a credit limit increase

1. Credit checks may be hard or soft, so confirm with the landlord or leasing provider.

How Long Does Hard Inquiry Stays on Your Credit Report?

Hard inquiries stay on your credit report for up to two years, but their impact usually fades within a few months. It is often ignored by most scoring models after 12 months. A single inquiry typically lowers your score by fewer than five points, though multiple inquiries can add up.

Note: An exception applies to auto loans, or student loans, where multiple inquiries happen within a set timeframe are often treated as one.

What is a Soft Credit Inquiry?

A soft inquiry occurs when you or an authorized party checks your credit report, or when lenders review it to preapprove offers. A soft inquiry does not affect your credit score, as it is not tied to a credit application.

When Can You Receive a Soft Credit Inquiry?

The scenarios when you may receive a soft credit inquiry are mentioned below:

1. While checking your own credits.

1. Loan prequalification or preapproval.

1. Companies may run soft inquiries to determine eligibility for special or promotional offers.

1. Employers may conduct soft credit checks as part of pre-employment screening.

1. Utility providers may review your credit to decide if a deposit is required.

1. While renting or leasing a home.

1. To set up credit-based insurance scores and premiums, many auto and home insurers use soft credit checks.

1. Soft credit checks are performed periodically to review account terms or offer promotions.

How Long Does Soft Inquiry Stays on Your Credit Report?

Soft inquiries also remain on your credit report for up to two years. They carry no repayment risk and do not affect your credit score, as they are not linked to credit applications or lending decisions.

Do Credit Inquires Impact Your Credit Score?

Credit inquires may or may not impact your credit score depending on the type of credit inquiry. Here are more details on it:

1. Checking your own credit or pre-qualification reviews will not affect your credit score.

1. Hard inquiries have a small and temporary impact.

1. Multiple applications made within a short period are often treated as a single inquiry.

1. Under models like VantageScore 3.0, inquiries made within 14 days may count as one, thereby helping you compare the rates while minimising the impact on your score.

How to Reduce Credit Inquires?

To reduce your credit inquires follow the below-mentioned steps:

1. Get prequalified first that usually involves a soft inquiry, helping you check eligibility and possible rates without impacting your credit score.

1. Apply for mortgages, auto loans, or private student loans within a short timeframe (ideally two weeks) so multiple inquiries count as one.

1. Space out credit card applications by six months or more when possible as credit card inquiries are counted separately.

1. Avoid unnecessary credit and apply only when it aligns with your financial goals and consider alternatives like saving instead of borrowing.

1. Review credit reports for accuracy and watch for unauthorized inquiries or signs of fraud.

Things to Consider Before an Inquiry

The important points that should be considered before an inquiry are given below:

1. Check Your Credit Report and Score

1. Track all three credit reports (Experian, TransUnion, Equifax) regularly for inaccuracies or unfamiliar activity.

1. To understand how lenders assess your risk, check your credit score regularly.

1. Review reports one or two months before any planned credit check to allow time to fix discrepancies.

2. Request Revisions

1. File disputes with credit bureaus if you find errors; each bureau has its own process.

1. Discrepancies often appear on multiple reports.

1. Consider fraud alerts or security freezes and report unfamiliar accounts or inquiries as potential fraud.

3. Consider Credit Prequalification

1. Prequalification gives a tentative view of approval, borrowing limits, and interest rates without a hard inquiry.

1. Though it does not guarantee approval, it helps identify lenders offering the best terms.

4. Look for Ways to Improve Your Credit

1. Practice good credit habits, such as pay on time, reduce balances, and maintain low credit utilization.

1. Improvements are possible within 30 days, but significant score changes may take months or years.

5. Unfreeze or Unlock Your Credit

1. before new credit checks, remove or temporarily thaw security freezes or locks.

1. Unlocking your credit must be requested separately at each bureau; Experian Premium allows instant unlocking via account or app.

A good credit score can help you secure lower interest rates on loans and credit cards.

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