Hard versus soft credit inquiries

Hard versus soft credit inquiriesAll three credit bureaus know when someone is looking at your financial history. The question is whether or not these inquiries are damaging to your credit report, as many people are under the impression that all inquiries reflect negatively upon the borrower.

Not true. There are two types of inquiries – hard and soft. The former variety is marked on your account for two years, and is made when you give a business, bank, landlord or employer permission to do a background check on you in your effort to secure a job, loan or lease.

Every time a person applies for credit, whether it is for credit cards, car loans, retail cards or other, the hard inquiry shows up in your history. A significant amount of inquiries within two years is a red flag to lenders, as it may look as though you have the potential to overspend. If you are shopping around for a loan, however, make sure all inquiries are done within a two-week period, as lenders will see that you are simply doing your research.

When you check your own credit, or if there are checks on your account for any other purpose than to make a credit decision, it is considered a soft inquiry and is not marked down in your history.