Hard and soft inquiries

Applying for a car loan can be a confusing process, especially for those with bad credit. Making matters worse is the wealth of misinformation out there that only clouds the real issues at play.

U.S. News and World Report recently set out to debunk a few of those myths so that those with bad credit can know exactly what affects their credit score and what doesn’t.

One of the myths surrounding credit is that an inquiry hurts your score. But many people do not make the important decision between hard and soft inquiry.

“Hard” inquiries are made because of an application for lending, like a credit card, mortgage or car loan. In these cases, a financial institution will look into one’s credit score. These types of inquiries actually can hurt one’s scores, the reason being that a consumer applying for lots of credit in a short time span can be seen as risky, as they’ll have multiple financial obligations.

For this reason, many opt not to check their credit score on a regular basis. Yet “soft” inquiries – checks into one’s own credit report – will not impact a score in any way. In fact, regular “soft” inquiries are a good idea, as consumers can know where they stand and dispute any inaccuracies.