There are two types of inquiries in credit reporting: A soft inquiry and a hard inquiry. A soft inquiry is when you or someone you authorize checks your credit report. This type of inquiry doesn’t have any application for credit involved, which means that it’s not going to affect your credit score. Only you can view soft inquiries on your credit report.
A hard inquiry, on the other hand, is made by a lender. This happens when you apply for a car or student loan or a mortgage. A hard inquiry appears on your credit and it can negatively impact your credit score.
How it Affects Your Credit Score
Before you get approved for a loan or mortgage, some lenders check whether you are eligible to get the credit or not. The only way to do this is by checking your credit history. They will want to know how you handle credit in the past and whether you are capable of paying your dues on time. Checking your credit history can also help them determine if you’re juggling with credit and how long you’ve been managing them. It helps them decide whether to extend additional credit to you or not.
While a hard inquiry doesn’t really significantly affect your credit score, several hard inquiries can tell lenders that you are a high-risk borrower. It suggests that you may not be ready to take on more credit. Fortunately, there are lenders who offer no credit check loans for those who have poor credit or no credit at all.
Keep in mind that these inquiries will stay on your credit report for up to two years. So you may want to minimize these if you’re thinking about taking a mortgage or a bigger loan down the road.
Can You Remove Them?
Because soft inquiries don’t appear on your credit report, we suggest that you regularly check your credit to ensure no identity theft cases. The only way to remove hard inquiries is when someone else applied for credit without your permission. You can dispute this to have the inquiry removed. Otherwise, you will need to minimize the damage so you don’t get affected by these hard inquiries.
If your scores were affected, what you can do is to make sure that all of your bills are paid on time. Never miss any payments to avoid further damage. As much as possible, don’t max out your credit cards. When you do decide to apply for more credit, make sure that you really need it. Monitor your credit from time to time for any suspicious activity that you need to be aware of.
Hard inquiries may affect your score and stay on your credit but not for long. For the time being, ensure that you take care of your credit to increase your chances of getting approved for future loans or mortgages. You can still get approved so long as you can prove to them that you are not a high-risk borrower. The most effective way to do this is by paying your dues on time.