What Is a Credit Inquiry?


IF YOU HAVE CHECKED your credit report lately, you may have noticed an “inquiries” section. An inquiry refers to a request to look at your credit file and falls into one of two camps: hard or soft.

A credit inquiry occurs when you apply for a credit card or loan and permit the issuer or lender to check your credit. Some inquiries have no effect on your credit, but others can lower your credit score.

Knowing the difference between the two types of credit inquiries and how inquiries affect your score is a must.

What Is a Credit Inquiry?

A record of a request for your credit report is called a credit inquiry. You’ll see an inquiry on your credit report anytime someone pulls your report from one of the three national credit bureaus.

Your credit report will tell you who has accessed your credit data and when. You will see lenders or card issuers on your report if you have applied for credit.

Other firms may request your credit report to provide an insurance quote or a background check. And sometimes inquiries may occur without your knowledge or permission.

Inquiries typically stay on your credit report for about two years. But they only factor into your FICO credit score for one year.

Do All Credit Inquiries Hurt Your Credit Score?

Not all credit inquiries are equal. Some types may indicate higher credit risk, and others do not. Even the two major credit scoring models, FICO and VantageScore, do not treat them the same way.

Unlike hard inquiries, soft inquiries will not affect your credit score. Here is more about both types of credit inquiries:

Soft credit inquiries. A credit application does not trigger a soft inquiry. Examples of soft credit inquiries include:

  • You check your own credit report.
  • One of your creditors checks your report.
  • An insurer pulls your credit for a quote.
  • A company views your credit report for a background check.
  • You seek preapproval for a loan or credit card or apply to prequalify for credit offers.

An interesting feature of soft inquiries is that only you and the credit bureau can see them. “Soft inquiries will only be visible to the consumer and will never be shown to other companies looking at your credit report,” says Matt Listro, expert in credit disputes and organizer of CreditCon, a conference for credit professionals.

Hard credit inquiries. A hard inquiry is linked to an application for credit, such as a mortgage, a credit card or an auto loan. It will appear on your credit report, and too many could hurt your score.

You can relax if you’re rate shopping and you apply for a few loans to get the best interest rate. Applications for the same type of loan within a certain time span will only count as one hard inquiry on your credit report.

VantageScore counts all inquiries within 14 days as a single inquiry if they’re for the same type of loan. “FICO, the newer versions, allows for a 45-day umbrella for inquiries pertaining to mortgage, auto and student loan applications,” Listro says…Read more>>