Author: Sean P. Egen
December 15, 2022
Applying for credit can be a daunting process.
That's why it is important to understand how credit inquiries can affect you before hitting "submit" on any credit application.
From finding the right credit card or auto loan to filling out a mortgage application and waiting for approval, obtaining new credit takes time, careful consideration, and patience. Each time a lender accesses your credit score to make a decision, you run the risk of damaging your creditworthiness.
According to myFICO.com, a credit inquiry is a "request by a 'legitimate business' to check your credit." These checks are categorized as either "hard" or "soft" inquiries, which we'll break down in more detail later. "Credit pulls" are often a casual term used to describe both types of inquiries which gives a person, lender, or company the ability to view your credit report and see your credit score. However, while both types of credit pulls are included on your credit report, only you can see your soft inquiries.
The main difference to note between a soft and a hard inquiry is that soft inquiries won't hurt your credit score. This is a good thing, especially since you often don't control when a soft inquiry happens! Employers and lenders alike can do a soft pull of your credit information to use for pre-approvals and background checks.
A soft inquiry can be triggered when you:
Unlike a soft inquiry, a hard inquiry can impact your credit score. Hard inquiries occur when you apply directly for a line of credit and are visible on your credit report to anyone who pulls it. One hard inquiry might not take more than five points off your credit score (if any), multiple hard inquiries in a short period of time can knock down your score and give the appearance that you're desperate for credit, possibly creating a cause of concern for potential lenders.
A hard inquiry can be triggered when you:
Hard inquiries stay on a credit report for two years—though they can only affect your score in the first 12 months—so it's best to be aware of how many hard inquiries you agree to each year.
Here are a few tactics you can use in order to avoid unnecessary hard inquiries:
First, before submitting a credit application, make sure to ask the financial company whether they'll be doing a hard or soft inquiry before submitting your credit application.
If you're shopping around for a home or auto loan, keep in mind the credit-scoring model actually accounts for rate shopping! If you make multiple inquiries within 45 days shopping for the best rate, credit bureaus will consolidate them as one inquiry to minimize the impact on your score.
Lastly, only apply for loans or credit cards you know you're likely to qualify for in order to minimize the risk of being rejected after a hard inquiry and therefore impacting your score.
By staying informed of the number of credit inquiries on your record, you can make smarter financial decisions and protect your credit score. With Credit One Bank®, you can track your credit score for free online. Being aware of the activity on your credit report is a key step to staying on course when working to improve your credit score.
If you’ve ever read a credit card or loan application, you probably encountered more than a few words that seemed to be written in a separate language. Credit terms can be descriptive and self-explanatory at their best, but also unclear and confusing at their worst. Especially given most of us don’t spend a lot of time perusing credit documents in our daily lives. What follows are 20 common credit terms most everyone should be familiar with. Doing so will hopefully save you some time and head-scratching the next time you review your statement, think about getting a new credit card, or dive into an article about credit.
When a potential creditor looks at your credit reports to help them make a lending decision, it is considered an inquiry. But how they look at it—with a “hard inquiry” or “soft inquiry” (aka “hard pull,” “soft pull”)—could have an effect on your credit score.
Your credit reports contain useful information that paints a picture of your “creditworthiness.” But, like any type of report, credit reports don’t tell a reader the complete story about you, your life, or how you’re living it. For that, they’ll have to read your autobiography.