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10.29.2020 / Borrowing « Back to all articles

How Soft and Hard Inquiries Affect Credit Scores Differently
How Soft and Hard Inquiries Affect Credit Scores Differently

A good credit score works in your favor when you're seeking out lending, whether for a mortgage, a new vehicle, or something else. When you know you have a significant purchase coming up, you should be even more careful than usual to make sure your credit report is in good shape. However, as you're shopping around for the best terms for your new loan, you may see offers that promise only a "soft pull" to see if you're preapproved. What's the difference between soft and hard inquiries? Do they both affect your credit rating equally? No, they don't. 
 

How Credit Inquiries Affect Your Credit Score 

When you look at the inquiries section of your credit reports, you see a list of lenders who have checked your credit. First of all, be sure that you authorized everyone on that list. A large number of inquiries you don't remember initiating could signal identity theft. Once you're confident everything's on the up and up, take a closer look at the type of inquiries that are on your report. 
 

Soft Inquiries 

Lenders, potential employers, and insurance companies may initiate soft inquiries on your credit report. Many credit card companies do this to preapprove you for an offer. If you decide to apply for a preapproved offer, most will follow up your application with a hard inquiry. Soft credit inquiries do not affect your credit score, and you may not dispute them. 
 

Hard Inquiries 

Only hard inquiries that you have personally authorized should appear on your credit report. Although this type of inquiry can bring down your credit score, the effect is usually small, and it should fall off the report in two years. However, some lenders may worry if they see a large number of hard inquiries in a short amount of time. They may take it as an indication that you are desperate for credit or that you are about to borrow more than you can repay. 
 

How To Minimize Damage to Your Credit Score 

When you're shopping around for favorable terms on a major loan, such as a mortgage, you will naturally have several hard inquiries over a short period. The good news is that most credit scoring models will consider a group of hard inquiries as a single inquiry as long as they are all for the same type of product (mortgage or auto loan, for example) and were all made within a two-week timeframe. The benefit for you is that you don't take a big hit to your credit score. To make the most of this benefit, be sure to research your options ahead of time, only apply for credit when you need it, and take advantage of preapproved offers. 

11.24.2020 / Borrowing

Falling Behind on Your Mortgage? Read This
When economic times are tough, it's easy to start falling behind on crucial monthly payments, including your mortgage.…

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10.29.2020 / Borrowing « Back to all articles

How Soft and Hard Inquiries Affect Credit Scores Differently
How Soft and Hard Inquiries Affect Credit Scores Differently

A good credit score works in your favor when you're seeking out lending, whether for a mortgage, a new vehicle, or something else. When you know you have a significant purchase coming up, you should be even more careful than usual to make sure your credit report is in good shape. However, as you're shopping around for the best terms for your new loan, you may see offers that promise only a "soft pull" to see if you're preapproved. What's the difference between soft and hard inquiries? Do they both affect your credit rating equally? No, they don't. 
 

How Credit Inquiries Affect Your Credit Score 

When you look at the inquiries section of your credit reports, you see a list of lenders who have checked your credit. First of all, be sure that you authorized everyone on that list. A large number of inquiries you don't remember initiating could signal identity theft. Once you're confident everything's on the up and up, take a closer look at the type of inquiries that are on your report. 
 

Soft Inquiries 

Lenders, potential employers, and insurance companies may initiate soft inquiries on your credit report. Many credit card companies do this to preapprove you for an offer. If you decide to apply for a preapproved offer, most will follow up your application with a hard inquiry. Soft credit inquiries do not affect your credit score, and you may not dispute them. 
 

Hard Inquiries 

Only hard inquiries that you have personally authorized should appear on your credit report. Although this type of inquiry can bring down your credit score, the effect is usually small, and it should fall off the report in two years. However, some lenders may worry if they see a large number of hard inquiries in a short amount of time. They may take it as an indication that you are desperate for credit or that you are about to borrow more than you can repay. 
 

How To Minimize Damage to Your Credit Score 

When you're shopping around for favorable terms on a major loan, such as a mortgage, you will naturally have several hard inquiries over a short period. The good news is that most credit scoring models will consider a group of hard inquiries as a single inquiry as long as they are all for the same type of product (mortgage or auto loan, for example) and were all made within a two-week timeframe. The benefit for you is that you don't take a big hit to your credit score. To make the most of this benefit, be sure to research your options ahead of time, only apply for credit when you need it, and take advantage of preapproved offers. 

Need a
Loan?

Loans from $120 to $15,000. Get funded as soon as today!

11.24.2020 / Borrowing

Falling Behind on Your Mortgage? Read This
When economic times are tough, it's easy to start falling behind on crucial monthly payments, including your mortgage.…