Differentiate between hard and soft news

Do you know which credit report inquiries lower your credit score?
October 25, 2015 – 05:45 pm
Kimpton Hotels

Sheet of paper with credit score.Like most things in life, credit scores can be frustrating if you don’t understand how they work. Did you know there could be errors on your credit report that are damaging your score? Or that not using your credit cards could backfire against you? And did you know that when some retailers and financial institutions access your credit report, the credit inquiries that occur could hurt your score … while other inquiries won’t? Not knowing these facts could seriously damage your creditworthiness in the eyes of potential lenders, so it’s important to stay on top of your credit education.

But let’s go back to the topic of credit inquiries. What exactly are they? Why are there different type, and more importantly, which kind could affect your credit? These are just some of the questions we’ll cover:

What is a hard inquiry?

A hard inquiry is an inquiry that occurs when a prospective lender checks your credit report to make a lending decision. Hard inquiries can slightly lower your credit score and will typically stay on your report for two years.

What is a soft inquiry?

A soft inquiry is an inquiry that occurs when a person or company checks your credit report as a background check, like when you check your credit score or a mortgage lender preapproves you for a loan. Soft inquiries can occur without your permission, but don’t worry – they won’t affect your credit in any way.

When do hard and soft inquiries occur?

Hard inquiries commonly take place when consumers apply for a credit card, auto loan, mortgage or other loan. On the other hand, soft inquiries typically occur when employers access your report to look for signs of risk or you check your own credit report or score from sites like Credit Karma, Credit Sesame or MyFICO. Lenders may also use soft inquiries to preapprove you for a credit card or loan. Since they’re not making a lending decision or guaranteeing approval – they're only saying you’re likely be approved for that credit card or loan – these inquiries are typically considered “promotional” and won’t affect your score.

Unfortunately, there are some gray areas where either a hard or soft inquiry could occur, including when a bank needs to verify your identity or you apply to rent an apartment or car. If you’re worried about the growing number of hard inquiries on your report, ask the financial institution or company what kind of inquiry it will make before deciding whether you’d like to proceed or not. This way, you can avoid potentially unpleasant credit surprises.

Do inquiries affect my credit score?

While soft inquiries won’t lower your score, hard inquiries could slightly lower your score. The good news: Hard inquiries typically don't affect your credit score by much – factors such as your payment history and credit utilization rate are usually weighted more heavily. However, the impact of an inquiry can vary according to your credit history. If you have few accounts, a short credit history or a ton of inquiries, an additional hard inquiry could have a greater impact on your score.

Keep in mind, when creditors see a lot of hard inquiries on a report, they become more wary about extending credit because numerous hard inquiries looks like a consumer is desperate for credit or was previously unable to get the credit he or she needed from other creditors. In other words, a lot of inquiries may make you appear like a higher-risk borrower, so it’s best to minimize them.

Can I avoid hard inquiries?

If you want to apply for a new credit card or loan, there’s no avoiding the subsequent hard inquiry.
However, there is good news for those looking to shop around for the best deal on a mortgage or auto loan – some credit scoring models will combine multiple inquiries within a certain time period into just one. If you’re going to rate shop, make sure you stay consistent and work fast. Credit bureaus usually pick up on the fact that you’re comparison shopping by noticing the types of credit lines you’re applying for and the size of your requested loan, and they will typically give you a 14 to 45 day window to finishing shopping.

In general, it’s best to check your credit score and only apply for credit cards and loans for which you’re most likely to qualify. This way, while you can’t avoid credit inquiries, you can minimize the number of them. However, don’t stress out about avoiding all hard inquiries – as mentioned before, while they do have the potential to damage your credit health, they generally play a minor role in your score.

How can I get rid of hard inquires I didn’t approve?

If there’s a hard inquiry on your report that you didn’t authorize, simply call or write to the creditor, tell them you didn’t authorize the inquiry and ask them to remove it. Alternatively, like any other incorrect information on your credit report, you can get rid of errors by disputing them directly with the credit bureaus. Your credit score is at stake, so you’ll want to ensure the information that calculates your score is as accurate as possible.

The Bottom Line: Between the fear of being rejected and the possibility of your score dropping, applying for a new credit account can feel like a scary experience. But it doesn’t need to be. By learning about which types of inquiries could affect your score, knowing how to avoid excessive inquiries and only applying for credit you’ll likely be approved for, you should be able to get the credit you need.

Source: money.usnews.com
You might also like
Parag Khanna on Hard and Soft Power
Parag Khanna on Hard and Soft Power
Shape-Shifting Robots May Switch Between Hard And Soft
Shape-Shifting Robots May Switch Between Hard And Soft ...
iPhone 6 Case,iPhone 6S Case,Lantier Slick [COOL Series] Durable Hybrid 3 in 1 PC+Soft Silicone Design Bumper Slim Hard Back Case Cover For Apple iPhone 6/6S Cool Shell Sky-Blue+Grey
CE (Lantier)
  • Specially designed for Apple iPhone 6/6S.
  • Made by high-quality Silicone inner-layer skin and an impact resistant Hard plastic outer-shell.
  • Soft Corner helps absorb shock.
  • All ports / buttons are accessible with case on, perfect fit.
  • Durability: 3 Piece Combo Hybrid design Dual-layer silicone cover with hard shell design gives optimal protection from bumps, drops, scratches, chips and dirt from...
S3 Case, Casemart High-Class Foldable Wallet Case Soft PU Leather Stand Cover with Magnetic [Card Holder] Protective Slim Shell for Samsung Galaxy S3 (i9300) -Purple
  • Good news is that you can watch a movie without your hands with the stand feature of the case, a adjustable angle to use your phone
  • Slots provides convenience while on the go.Wallet style folding magnetic flip closure cover case only, the card slots/pocket on the interior of left side cover go
  • It does have a magnet in it and a loop design for security of closure. The outside is a light pattern very pleasant color, looks stunning with the style
  • High quality PU leather and Soft TPU will make up the comprehensive protection, which reduce the damage from dust, scratch and bumps efficiently
  • Package include: 1x fashion Cover, 1x Stylus pen and 1x Screen Protector. We will adopt the scot-free package for your item and shipping via takes 7-12 days
MSD Premium Gaming Tablemat Mousepad vintage radio of the last century with the knobs to adjust the radio channels Natural Rubber 24 x 15 x 0.2 Inch IMAGE 24022813
Office Product (MS Depot)
  • MADE IN USA. Designed for Gamers to Game like how it should be.
  • Super-fine and high-density materials, waterproof and easy to clean.
  • Silky surface is Stain and Water resistant. It can be wiped clean easily. Measuring 24 x 13 x 0.5960
  • Compatible with optical, wireless or laser mice
  • Reinforced stiched edges prevent deformation.
Delphi Delphi SA10002 XM SKYFi Vehicle Kit
CE (Delphi)
  • Works in any vehicle equipped with a Delphi XM SKYFi radio system
  • Includes a vehicle cradle with hard or soft dashmount options
  • A small, magnet-mounted vehicle antenna improves reception
  • Cassette adapter lets you listen through your car stereo
  • AC/DC power adapter plugs into your car s cigarette lighter
E-GLL E-GLL dripping News watercolor Dreamcatcher Iphone 6 of White Plastic case photos said
Wireless (E-GLL)
  • Image scratchproof and waterproof, image never fade
  • Made from durable high quality plastic, provides maximum protection for you iPhone
  • Precisely cut openings to allow full access to all the functions of your phone
  • Allows access to all buttons and ports, with opening for top and side buttons.
  • Soft interior silicone design for shockproof
Related Posts