Your credit report says a lot about you, so it’s important to understand what’s on it and how it works. Banks, lenders and others will want to look at your credit report every once in a while to check out the health of your credit. But not all credit checks are the same. In fact, there are two very different types—“hard inquiries” and “soft inquiries”—and only one will affect your credit score.
Hard inquiries make an impact
A “hard inquiry” happens when a bank or lender looks at your credit report as part of a review of your application when you apply for a credit card or other type of loan. A hard inquiry can affect your credit score, usually by a few points. But having too many on your credit report, especially within a short period of time, can significantly lower your credit score. Plus, each hard inquiry stays on your report for up to 2 years. Some things that may trigger a hard inquiry include:
- Applying for a credit card
- Requesting a credit limit increase
- Applying for a loan
- Buying or renting a home
- Opening a phone, cable or Internet service account
Soft inquiries barely leave a mark
“Soft inquiries” include checks where your credit is simply being reviewed. They only appear on the credit report you see (not the version lenders have access to) and are usually removed within 12 months. And don’t worry—they won’t affect your credit score. Soft inquiries may include things like:
- Checking your own credit score
- Insurance offers
- Background checks
- Pre-qualified credit card offers (although responding to these offers will trigger a hard inquiry)
Remember, even though your credit score isn’t always affected by an inquiry, you’ll want to control how many “hard” hits it takes. Knowing how to check your credit report will help you know where you stand.