Hard vs. Soft Credit Inquiry

Creating an accurate credit score is a very complicated process. Many things decide your credit score, including those unrelated to making payments.  One thing credit card companies don’t want to seeis  someone gaining too much credit too quickly.

Quickly trying to open many lines of credit could be a sign that someone is heading into financial trouble or may be taking too many risks.  In order to track how often people are checking or changing their credit,  credit bureaus classify it as either a hard or a soft credit inquiry.

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A hard inquiry affects your credit score negatively.  It tells the credit card company that you are trying to increase your lines of credit.  Hard inquiries appear if you open up a new credit card, try to get approval for a loan, apply for a mortage, etc. Generally, you will have to approve a hard inquiry, but that is not always the case.  Luckily, hard inquiries have a small effect on your credit score, and the effect lessens over time.  If you find yourself having too many hard inquiries, the best option is to wait them out and keep your credit payments up to date.

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Soft Inquiries have no affect on your credit score.  Soft inquiries occur when you track your credit or sometimes when a company asks to check your credit score.  Some credit bureaus do keep track of the soft inquiries into your credit, but they do not affect your credit score and should only be visible to you.

How to know if someone will perform a soft or hard inquiry?

If the company asks your permission, it is likely a hard inquiry.  Don’t fret however, because a single hard inquiry will have a very small effect on your credit score.

 

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