When it comes to your credit score, you probably already know that your payment history, length of credit and credit usage have an impact, but did you know that inquiries on your report can also influence your score? Let’s dig into the difference between hard and soft credit inquiries – and how applying for a personal loan will impact your credit.
What is a credit inquiry?
A credit inquiry is a request to see your credit report. Credit scoring systems, such as FICO® or VantageScore® can see whether you have applied for credit recently by looking at inquiries on your credit report. Actions such as applying for several different credit cards in a short amount of time can have a negative effect on a credit score, as that can suggest you’re experiencing financial difficulties, struggling to pay bills or overspending. That said, not all inquiries are created equal. There are two types of credit inquiries: hard and soft.
What is a hard credit inquiry?
Hard credit inquiries impact your credit score. Common types of hard inquiries include credit card applications, home loan applications and auto loan applications. When you apply for credit, you give the lender authorization to pull your credit, which also grants them the ability to see other hard inquiries on your credit report. You should be aware that hard credit inquiries remain on your credit report for about two years, though their impact decreases over time.
What is a soft credit inquiry?
Soft credit inquiries do not impact or change your credit score. They are visible only to you. Soft inquiries include pre-employment background checks, lenders monitoring an existing account, or lenders making prescreened offers.
Why you should monitor your own credit report:
Credit bureaus are required to provide you with a free copy of your credit report once a year. It’s important to take advantage of this and review your credit report on the regular, as errors on your report can impact your ability to get credit or lower interest rates. If you recognize an error on your report – or an inquiry you didn’t initiate – contact the credit bureau.
Does applying for a personal loan affect credit?
The online pre-qualification will not impact your credit if you are not approved, as it is only a soft credit inquiry. We won’t do a hard pull on your credit, which can impact your credit score, until you have completed the full application and decide to move forward.
See what our customers are saying:
The process was as easy as it is to tie my shoe. They are nice and friendly. If you’re looking into getting an easy loan with no credit check. Stop here. I HIGHLY recommend them.
– Thomas H.
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