Hard Inquiries and Soft Inquiries



Content from www.creditkarma.com



There are two kinds of inquiries that can occur on your credit report: hard inquiries and soft inquiries. While both types of credit inquiries enable a third party, such as you or a lender, to view your credit report, only hard inquiries can negatively affect your credit score.

What is a hard inquiry?

Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision. They commonly take place when you apply for a loan, credit card or mortgage, and you typically have to authorize them.

Hard inquiries could lower your credit score by a few points and may remain on your credit report for two years. Fortunately, as time passes, the damage to your credit score usually decreases or disappears, often even before the hard inquiry falls off your credit report.


What is a soft inquiry?

Soft inquiries typically occur when a person or company checks your credit report as part of a background check. Examples include employer background checks, getting pre-approved for credit card offers and checking your own credit score. Unlike hard inquiries, a soft inquiry may occur without your permission. However, they won’t affect your credit score. Soft inquiries may or may not be recorded in your credit report, depending on the credit bureau.

One of the biggest credit misconceptions is that checking your own credit score using companies like Credit Karma will hurt your credit score. This is not the case. You can check your credit scores at Credit Karma as often as you like without affecting your credit score.

Examples of Hard Versus Soft Inquiries

Trying to figure out what type of inquiry will be placed on your report? Here’s a general guide.

Hard Inquiries

  • Applying for an auto loan, student loan, business loan or personal loan
  • Applying for a credit card
  • Applying for a mortgage


  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account
  • Requesting a credit limit increase
  • Getting a cell phone contract
Soft Inquiries

  • Checking your own credit score
  • Pre-approved credit card and loan offers
  • Background check, such as those done by employers


  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account

If you’re unsure of whether a financial action you’re about to take will result in a credit inquiry, ask the financial institution or company. And if a financial institution or company informs you that they will be checking your credit, ask them to distinguish whether or not it is a hard or soft inquiry.

Why Hard Inquiries Hurt Your Credit Score

While hard inquiries are necessary for certain financial actions, such as applying for a loan or credit card, they should be limited as much as possible. Your credit score may be penalized for multiple hard inquiries because applying for too much credit at one time may indicate that you’re desperate for credit or aren’t able to qualify for the credit you need. While one hard inquiry will usually just knock a few points off your credit score (if any), multiple hard inquiries in a short amount of time may cause significant damage to your score.

Keep your hard inquiries to one or two a year if you can. Credit Karma data shows that on average, consumers with lower numbers of hard credit inquiries have higher credit scores.

How to Dispute Hard Credit Inquiries

If a hard inquiry occurred without your permission, check your credit reports to see the full details of the inquiry and determine if you should attempt to dispute it.

Note that you can only dispute hard inquiries that have occurred without your permission. If you’ve authorized the hard inquiries, it generally takes up to two years for them to fall off your report.


Before applying for credit, take time to build your credit score. With a higher credit score, you may improve your chances of being approved for the financial products you want at the best terms and rates.

To keep track of hard inquiries, check your credit scores and credit reports at Credit Karma. In addition to providing you with your free credit scores from TransUnion and Equifax, Credit Karma can notify you of any important changes to your TransUnion credit report, including any new hard inquiries.

7 Credit Score Lies You Shouldn’t Believe

Information found at www.cheatsheet.com

How much do you really know about credit scores? Though your credit score affects everything from your ability to rent an apartment to how much you’ll pay every month on your car loan, many people aren’t sure how scores are calculated, don’t know what the scores are used for, and believe common credit score lies and myths that cause them to make dumb money decisions. So what’s the truth behind this all-important number?

“Your credit score plays a pivotal role in your financial journey. As far as numbers go, it’s one of the most important that will ever be attached to your name,” Julie Pukas, head of U.S. bankcard and merchant services at TD Bank, told The Cheat Sheet.

The majority of people understand that mortgage lenders and credit card companies use credit scores when making lending decisions, a recent survey by the Consumer Federation of America (CFA) and VantageScore found. Most also know that declaring bankruptcy or making late payments will hurt your score. But beyond those basics, misinformation and credit score lies abound. Only 25% of people surveyed by the CFA were aware that a low credit score could increase the cost of a car loan by $5,000, and more than half didn’t realize landlords, utility companies, cellphone companies, and insurers sometimes check credit scores.

“Many people scorn credit, but the simple fact of the matter is that in most situations, your credit score is a deciding factor in whether you’ll be approved for a mortgage, car loan, credit card, or another type of loan,” Pukas said. “If you’re looking for an apartment, your score may impact your probability of getting approved, the size of your security deposit, and how much you pay in fees. It can also impact how much you pay for home and auto insurance and might even decide whether you’re approved for a new cell phone plan.”

Being misinformed about credit scores or believing credit score myths can have serious financial consequences, whether you’re a borrower or not. You can boost your credit savvy by familiarizing yourself with the truth behind these seven big credit score lies.

Continue reading “7 Credit Score Lies You Shouldn’t Believe”