hard inquiries

The Difference Between Hard Inquiries and Soft Inquiries

When you apply for credit, you authorize your lender to ask for a copy of your credit report. If you open several credit accounts in a short period of time, you may be seen as a large credit risk to your lender. The important thing to remember, is that the only inquiries that affect your credit score are the hard inquiries. Let’s take a look at the difference between hard inquiries and soft inquiries.

The Difference Between Hard Inquiries and Soft Inquiries

Hard inquiries

Hard inquiries occur when you apply for new credit. This can lower your credit score for one year by 5-10 points and will remain visible on your report for 2 years. Some examples of hard inquiries include mortgage credit applications, apartment rentals, credit cards, student loans, or a personal loan.

Soft inquiries

Any time a lender requests your credit score and it’s not related to a credit application, it’s a soft inquiry. Most of the time an existing creditor simply wants an idea of what interest rate to offer you regarding their service. Some examples of soft inquiries includes checking your own credit score, promotional credit cards, background checks, or opening a cable or phone account. The best precaution you can take as a borrower is to ask the lender what kind of credit inquiry they will pull before you reapply. The last thing you want is for the lender to pull a hard inquiry without you being aware and potentially dropping your credit score.

Can I be denied because of a hard inquiry?

While your inquiries play a part in granting you a loan, your payment history and credit utilization matter most. Remember, lenders approve credit based on their judgement of how successfully you manage your finances. So if you have one too many inquiries in the last year, but you’ve paid all your credit cards on time, there is little chance that the inquiries will cause you to be denied.

Is there a way to remove hard inquiries from my credit report?

Hard inquiries can only be removed if they’re inaccurate or pulled without written permission. The same goes for an incorrect missed payment. You’ll need to call or write to the lender that checked your credit report to remove the unauthorized inquiry from your file. This could take a week to a month, depending on the complexity of the request. Even if the lender agrees to remove the inquiry, your score may not be 100% reflective of what it would be without the initial inquiry. If you don’t recognize the lender, someone may be trying to apply for credit in your name. If you suspect identity theft, it’s imperative that you impose a fraud alert on your credit.

You may also like: 5 Ways to Improve Your Credit Score Now