When it comes to credit language, some terms can be more complicated than others. Especially if there’s two of the same thing.
Here’s a little Q&A to better understand the difference between hard and soft credit inquiries:
First off, what is a credit inquiry?
A credit inquiry is a request to see your credit report. Credit scoring systems can consider whether you have applied for credit recently by looking at inquiries on your credit report. Sometimes applying for a lot of credit in a short amount of time can have a negative effect on a credit score; however, not every inquiry has the same impact on your credit score. Inquiries fall into two categories: hard and soft.1
What is a hard inquiry?
Hard inquiries are typically inquiries by lenders after you apply for credit such as an auto loan, personal loan or credit card.Lenders and other third parties can see hard inquiries on your credit report. These inquiries may have a negative impact on your credit score because credit scoring models can look at how recently and how frequently you apply for credit.2
What is a soft inquiry?
Soft inquiries are reviews of your credit report that do not impact or change your credit score. They are only visible to you and do not appear on credit reports pulled by lenders, employers or other third parties. Soft inquiries include inquiries by lenders who are monitoring an existing account, looking at credit reports to make “prescreened” credit offers or using credit reports to pre-qualify individuals for credit offers.
Consumers can also place soft inquiries on their credit reports by requesting free copies of their credit report. Here at OneMain, we provide our customers with a free VantageScore credit score.
Know before you apply
If you plan to apply for a new line of credit, it can be helpful to know the facts beforehand. For more information on credit, check out these 10 common credit terms defined and four ways to get smart about credit.
1. Federal Trade Commission. “Credit Scores.” FTC.com.https://www.consumer.ftc.gov/articles/0152-credit-scores (accessed November 9, 2017).
2. Consumer Finance Protection Bureau. “What is a Credit Inquiry?” Consumerfinance.gov. https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/(accessed November 9, 2017).
The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of OneMain. The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else. The author was compensated by OneMain for this post.