It’s generally a smart idea to keep a check on your credit reports. Doing so will alert you in case there are any potential issues that might affect your credit score. The best part? The inquiry doesn’t negatively impact your score.
On the other hand, when external creditors review your credit report, it can negatively affect your credit score. In this article, we’ve differentiated between the two types of credit inquiries and how they impact your credit report.
A hard inquiry is when a creditor or lender asks for your credit report from one of the three credit bureaus. This is usually a part of their decision-making process when you apply for credit, such as a loan or rental application.
A hard inquiry stays on your credit history for two years. This impacts your credit score negatively, but over time, the impact fades. You can also seek the help of a credit repair consultant to mitigate the situation.
A hard inquiry temporarily stays on your credit history because it’s attributed to multiple new accounts. And this generally means you’re risking overspending or are struggling to pay your bills.
However, many other reasons lead to multiple inquiries and credit probes, which is why hard inquiries remain on your history only temporarily.
A soft inquiry is when you check your credit report, or a potential employer reviews your credit report with your permission. A soft inquiry also includes when lenders or credit card companies check your credit to approve you for offers beforehand.
Soft inquiries are not conducted regarding a specific credit application; therefore, they do not impact your credit report. Soft credit checks include insurance applications, personal credit checks, etc.
Managing Your Credit History
While hard credit inquiries have a temporary negative impact, it’s always best to avoid having any in your credit history. Getting credit counseling is a smart way to keep your credit history in check. Some ways to manage your credit history include:
- by conducting occasional soft inquiries to stay on top of your credit history;
- by regularly reviewing your credit reportto check for any unauthorized hard inquiries;
- by applying for credit only when you need to.
If you’re worried about your credit history and would like to have it reviewed by a credit repair consultant, contact us for affordable credit services.