How Do Inquiries Affect Your Credit?
When you apply for a bank account, credit card, or loan, the lender or creditor may perform a credit check, or inquiry, on your credit report. A potential landlord or employer may also perform credit checks when you apply for an apartment or a job. There are two types of credit inquiries and they have different uses and impact on your credit.
Below, we go over the differences between the two and how they may affect your score.
Hard Inquiries
A hard inquiry is a credit check that occurs when you apply for credit, such as a mortgage, car loan, or credit card. Hard inquiries can affect your credit score and remain on your credit report for up to two years. If there are multiple hard inquiries within a short period, like when you’re shopping for loan rates, bureaus count them as one hard inquiry.
Lenders and creditors typically use hard inquiries to determine the level of risk they assume by lending you money.
Soft Inquiries
A soft inquiry is a credit check done for non-credit related reasons. Examples of this include job applications, rental applications, or when you check your own credit. Soft inquiries do not affect your credit score, but may be visible on your report.
In short, hard inquiries may have a negative effect on your credit score and stay on your report for two years, while soft inquiries may appear on your credit, but have no impact on your score.
Did you know that applying for an account with Grow Credit will not affect your credit score? We don’t perform a hard credit check. When you apply for a Grow Credit account, we perform a soft credit inquiry for identity verification purposes only.
You can read more about your credit on our crash course, Grow & Learn: Credit 101.
