Credit Inquiries and Their Purpose
There are two types of Credit Inquiries… Hard Inquiries, which can lower your credit score and Soft Inquiries, which don’t show on your credit report that lenders view. It’s important to know the difference between the two, as to many inquiries can potentially harm your credit score, lenders will also look at you as a risky borrower.
Hard Inquiries
Hard Credit Inquiries happen when you are applying for credit from a lender. These inquiries stay on your credit report for 24 months (2 years) from the date it happens. These inquiries can potentially lower your credit score for 12 months if you have numerous inquiries. The reason these look risky is because you are applying for credit, so too many applications makes you look bad. Reducing the amount of hard inquiries on your credit report can give a significant boost to your scores, as well as heighten your chances of receiving an approval longer down the line.
Soft Inquiries
These happen when you are checking your own credit, applying for insurance, getting a background check, etc. These do not report on your lenders credit report and others can’t see these inquiries, so they don’t pose you as a risky consumer to potential lenders. Soft inquiries do not affect your FICO Credit Scores, this is important to keep in mind when checking you’re own credit, or if you’re are thinking of investing in credit monitoring.
If you want to learn more about credit scores, inquiries or improving your credit, please visit our website: CreditCEO.com