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 needless checks and fraudulent activity occurring in your name.
Q: WHAT IS A CREDIT INQUIRY?
A: 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.
Q: WHAT IS A HARD INQUIRY?
A: 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.
Q: WHAT IS A SOFT INQUIRY?
A: 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.
Q: WHEN DOES A HARD INQUIRY OCCUR?
A: When you apply for a credit card, auto loan, mortgage, student loan, other types of financing and loans or an apartment lease, a hard inquiry is placed on your credit reports. Your consent is required for a hard inquiry – and it could impact your credit scores.
Q: WHEN DOES A SOFT INQUIRY OCCUR?
A: 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.
Q: WHAT HAPPENS WHEN I CHECK MY OWN CREDIT AND HOW OFTEN CAN I CHECK MY OWN CREDIT?
A: Checking your own credit is considered a soft inquiry, no matter how detailed the reports. 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.
Q: HOW WILL A HARD INQUIRY AFFECT MY CREDIT SCORES?
A: 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.
Q: HOW LONG DOES A HARD INQUIRY STAY ON MY CREDIT REPORTS?
A: 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.
Q: SHOULD I BE CONCERNED ABOUT MULTIPLE HARD INQUIRIES WHEN RATE-SHOPPING FOR LOANS?
A: 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 within 14 days; mortgage and student loans are within 30-45 days.
Q: HOW WILL A SOFT INQUIRY AFFECT MY CREDIT SCORES?
A: 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.