What is the difference between hard and soft credit inquiries
When a lender looks at your credit report and score they take many variables into consideration. Lenders look at your credit score, payment history, amount owed, types of credit, and the length of established credit. One of the many factors lenders consider when deciding whether to lend involves the number and types of credit inquiries made on your credit report.
Credit inquiries are just as they sound. They are notations on your credit report informing lenders that others have been checking your report. Creditors check your report for a variety of reasons. The reasons for these inquiries can have an impact on your score.
There are two main types of credit inquiries:
- Hard inquiries occur when you apply for credit with a credit card company, auto loan company, bank, or credit union. The financial institution checks your credit report, with a hard inquiry. Hard inquiries show up on your credit report and may impact your credit score.
- Soft inquiries are initiated by lenders or credit card companies considering pre-approvals for things like credit card offers, line of credit extensions, even apartment rentals and credit checks for jobs may rely on soft inquiries. These type of inquiries will not have a negative impact on your credit report.
You may not know all the lenders associated with soft inquiries on your credit report. However, you should be aware of all the hard inquiries as they should have all been submitted by you. If you suddenly see several applications on your credit report that seem out of place or suspicious, you might want to check to see if you’ve become a victim of identity theft.
Many consumers have enrolled in credit monitoring services that help the monitor any activity being reported, including inquiries and new loans. Check out this list of 7 of the best credit monitoring services.
How long do credit inquiries remain on your credit report?
Hard inquiries may remain on your credit report for up to two years. However, the impact they have on your credit score lessens over time. If you’re worried about having too many inquiries on your report, but want to shop around for the best possible rates, it is best to keep your inquiries clustered within a two-week window of time.
Most lenders will see that for what it is, shopping around for the best rate, and not consider that as a mark against you. Red flags begin to appear, however, when there are new inquiries consistently every month or so. Some lenders may view that as an inability to live within your means or signs of financial trouble.
CAMPUS can help!
While your credit score allows you and lenders to gauge your ability to manage debt responsibly, your credit history is just as important to review. Obtain a free copy of your credit report each year at www.AnnualCreditReport.com and review it for possible errors or fraudulent activity.
Speak to a CAMPUS Representative if you have questions about credit inquiries or other aspects of your credit report, we’re here to help!
By Campus USA at 28 Apr 2020, 16:03 PM