When you’re talking about credit history, an “inquiry” refers to each time someone looks at your credit report. This may also be called “pulling a credit report.” And while you may have heard that too many credit inquiries negatively impact your credit score, that’s only part of the story. This is because there are two forms of credit inquiries: the soft inquiry and the hard inquiry.
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Soft inquiries get carried out by other individuals or organizations:
- by lenders, to offer new credit or additional credit and pre-screened offers to qualified credit card borrowers
- by lenders, to review transactions and payments of accounts for existing customers
- by employers, doing background checks on potential new hires
- by the IRS, to confirm your identity and protect your privacy when accepting your income tax return
By contrast, a hard inquiry is one where an actual lending decision is being made, such as applying for a home loan. A hard inquiry should not occur without your knowledge.
A third category of inquiries may be considered either soft or hard, depending on the guidelines of the relevant creditor and of the credit bureau. These include inquiries:
- by car rental agencies, when you rent a car
- by a television or internet services provider, when you want to set up a new account
- by a landlord or rental agent, when you want to rent housing
- by a financial institution, when you apply to open an account
If you’re concerned about whether an inquiry will be considered hard or soft, you can ask the institution making the inquiry.
Is checking my own score considered a hard or soft inquiry?
When you check your own credit score, it is considered a soft inquiry as long as it’s not part of an application. And while you know a soft inquiry has been completed (because you did it yourself), many times soft inquiries occur without your knowledge, such as when lenders want to pre-screen you for credit card offers, or when existing lenders check on your existing accounts.
Do soft inquiries lower my credit score?
Although hard inquiries impact your credit score, the key characteristic of a soft inquiry is that it should not adversely affect your credit. So, no matter how many soft inquiries get carried out on your credit report either by lenders, the government, potential employers or even by you, your credit score shouldn’t go down because of them.
This is important for individuals who are working hard at improving their own credit, who may want to check their own reports to see their progress and also to see who else has been doing soft inquiries on their credit file.
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Federal law entitles everyone to an annual free credit report from each of the three credit reporting agencies, Equifax, Experian, and TransUnion.
Although soft inquiries don’t affect your credit score, if many hard credit inquiries occur within a short time frame, it may indicate that you are a credit seeker who’s trying to borrow money from several sources at once. This behavior typically indicates a higher financial risk to lenders, so your credit score may suffer.