I’m sure you’ve heard sage advice that every credit inquiry will impact your score negatively.  While there is some truth to this, your credit score is affected by a number of reasons.

In part; yes your credit score is affected by the number of inquiries, however, if you are looking for a mortgage or auto loan, some credit score models allow for a certain level of shopping around, which essentially triggers the credit bureaus by identifying the multiple inquiries in a short amount of time as just one.

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There are two types of credit inquiries; hard and soft, both credit queries are requests from financial institutions, retailers and other lenders.  Some of these inquiries ping your credit negatively and some do not.  The interesting part is that while both appear on your credit report, you are the only one with the ability to see your soft inquiries, and anyone who requests your report can view your hard inquiries.

Soft Inquiries

Soft inquiries are a routine check a lender submits to see if you’re creditworthy and can be done without your permission.  In addition, you could also trigger a soft inquiry when you check your own credit.

If you are checking your own credit, credit bureaus just assume that you are using the information for your own personal use and therefore does not reflect a need for additional credit.

It’s actually a good idea to check your own credit from time to time.  You can get a free copy of your credit report once a year from each of the three major credit reporting agencies.  If you’re interested in checking more than once a year you will have to pay a small fee.

Hard Inquiries

A hard credit inquiry takes place when a potential lender examines your report and analyzes it to determine if they will extend an offer to credit.  For instance, if you apply for a home mortgage or a car loan, your lender will make a hard inquiry of your credit to help determine if you qualify for the loan.

Hard inquiries are the kinds that do have the power to bring down your credit score. Credit bureaus will ding your score for these inquiries because they reflect a greater need for credit.

Be cautious, but diligent when you check your credit or when you apply for credit.  When you go about the process responsibly, you can achieve the benefits of comparison shopping without causing undue damage to your credit profile. All you have to do is shop wisely.

The Certo Team
55 N. Arizona Place Suite #103
Chandler, AZ 85225
602-429-6789