Hard Inquiries - What Are They?

If you've been looking to improve your credit you are probably familiar with many terms that affect your credit score - one being a hard inquiry. What exactly is a hard inquiry and what does it mean for your credit?

Hard Inquiry - What Is It?

There are two kinds of inquiries that you will see on your credit report. A soft inquiry is when you request your own credit report or a creditor does without the intention of applying for additional credit. Soft inquiries don't have any negative affect on your credit even if there are 100.

A hard inquiry is when a lender pulls your report in response to an application for a loan, credit card, mortgage or some other kind of borrowing request. 

Hard inquires aren't necessarily negative on their own but if you have several they become negative because it shows lenders that you are looking for credit and possibly being denied (and thus re-applying, triggering a new inquiry).

How Do They Affect My Credit?

Hard inquiries can live on your credit report for up to two years but can sometimes fall off sooner.

If you have one or two per year then you will likely not see too much of an affect on your credit report and score but once you get over 3 you are going to take a little bit of a hit.

But all in all hard inquires won't kill your score but being mindful of them is wise if you are looking to apply for a loan or mortgage in the near future or just trying to understand your finances a bit better.

How Can I Manage Them?

You can avoid multiple hard inquiries by simply doing your research on your loan or credit needs before you apply. If you are looking for a new credit card determine what you are looking for and then shop around for a card that meets all of those needs and then apply. Sometimes people are indecisive and apply to more than one lender, a practice that can leave you with more hard inquiries than you would like.

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