Contrary to how it may seem in today’s data-fueled environment, your credit reports are not “open books” to be read by anyone. Only organizations with a legitimate business reason – and anyone who has your written consent – can check your credit. Understanding the what, when, and how of credit inquiries is an important part of protecting your credit scores from unnecessary inquiries and fraudulent activity in your name.
A credit inquiry is a record of a financial institution, business, or person requesting to view your credit report information from one or all three national credit reporting bureaus – TransUnion®, Equifax®, and Experian®. Also called “credit pulls” or “credit checks,” there are two types: hard inquiries and soft inquiries.
A hard inquiry, or hard pull, is a detailed credit check done by a prospective lender to evaluate your credit reports and determine your creditworthiness before approving you for a loan or extending credit.
A soft inquiry, or soft pull, is more like a background check. It provides a glimpse into your credit history, but not the full details of your credit report.
When you apply for a credit card, auto loan, mortgage, student loan, other types of financing, or an apartment lease, a hard inquiry is placed on your credit report. Your consent is required for a hard inquiry – and it could impact your credit scores.
A soft inquiry is often pulled to accompany other types of applications that don’t involve you actively seeking credit or a loan. For instance, a soft inquiry occurs when a potential employer or landlord runs your credit as part of a background check, or you receive a pre-approved credit card offer in the mail.
Checking your own credit is considered a soft inquiry, regardless of how detailed the reports are. You can check your own credit scores and the full details of your credit reports every day if you want. Checking your own credit has no impact on your credit scores or reports.
Even one hard inquiry can knock a few points off your credit scores – and multiple new inquiries could reduce your scores even more. When lenders see a slew of new hard inquiries hit your credit reports, it’s a red flag that you may be stretched thin financially and could be credit-shopping.
A hard inquiry will remain on your credit reports for two years – but the good news is, it will only figure into your credit score calculations for the first 12 months.
Typically, multiple inquiries from auto, mortgage, or student loan lenders within a short time frame are treated as a single hard inquiry – and will have a minimal impact on your credit scores. In general, the rate-shopping window for auto loans is 14 days; for mortgage and student loans, it is 30-45 days.
Soft inquiries should never impact your scores. While you may see soft inquiries on your credit reports, no one else can – and they are not figured into your credit score calculations.