Your credit score plays a crucial role in shaping your financial opportunities. Whether applying for a mortgage, auto loan, or credit card, lenders assess your creditworthiness—and credit inquiries are a big part of that evaluation. But not all inquiries are equal. Hard inquiries can have a direct impact on your credit score, while soft inquiries are harmless. Let’s dive into the truth about these credit inquiries, so you know exactly how they work and how to navigate them effectively.

Understanding Credit Inquiries

When someone checks your credit report, this action is logged as a credit inquiry. Inquiries provide insights into how actively you’re seeking credit. Here are the two types of inquiries:

Hard Credit Inquiries

A hard inquiry, also known as a "hard pull," occurs when a lender reviews your credit report to make a lending decision. For example:

• Applying for a mortgage or auto loan

• Requesting a new credit card

• Seeking approval for personal loans

Impact: Hard inquiries can temporarily lower your credit score by 5–10 points and remain on your report for two years. However, their impact diminishes after the first year.

Soft Credit Inquiries

A soft inquiry, or "soft pull," happens when a person or organization checks your credit for non-lending purposes, such as:

• Checking your own credit score

• Getting pre-approved offers from lenders

• Employers running background checks

Impact: Soft inquiries don’t affect your credit score at all.

Feature	Hard Inquiry	Soft Inquiry
Purpose	Loan approval, new credit application	Pre-qualification, credit checks
Effect on Credit	Temporary score drop	No impact
Who Sees It?	Lenders, credit report viewers	Only you
Duration on Report	Stays for 2 years	Not visible to lenders

Pro Tip: Too many hard inquiries in a short period can be a red flag for lenders, signaling financial instability.

How Hard Inquiries Affect Your Credit Score

Impact on Score

Hard inquiries account for 10% of your FICO score. While the impact is typically small, excessive inquiries can suggest credit risk.

• Data Insight: Individuals with six or more inquiries on their report are eight times more likely to declare bankruptcy.

Rate Shopping

When shopping for the best loan rates (e.g., auto loans or mortgages), multiple hard inquiries within 14–45 days are treated as a single inquiry. This is known as rate shopping.

When to Worry About Hard Inquiries

• Multiple Loan Applications

  If you're applying for several credit accounts in a short time, the cumulative effect of hard inquiries could lower your score.

  
  

• Unfamiliar Inquiries

  Check your credit report regularly to ensure there are no unauthorized hard inquiries.

  
  

  Tip: Use smartcredit.com for credit checks from the three major bureaus.

Myths About Credit Inquiries

1. "All Credit Inquiries Hurt Your Score"

   Only hard inquiries have the potential to lower your score.

   
   

2. "Hard Inquiries Are a Huge Deal"

   The impact of a hard inquiry is usually minor unless you’re already on the edge of a credit threshold.

   
   

3. "Soft Inquiries Are Invisible"

   They show up on your credit report, but only you can see them.

How to Minimize the Impact of Hard Inquiries

1. Space Out Applications

   
   

   Avoid applying for multiple loans or credit cards within a short time.

2. Monitor Your Credit Report

   
   

   Regularly check your report for accuracy and unauthorized inquiries.

3. Use Pre-Qualification Tools

   Many lenders offer pre-qualification that only requires a soft pull.

   
   

Pro Tip: If you're planning a major purchase like a car or home, prepare your credit score ahead of time to avoid unnecessary inquiries.

How Soft Inquiries Can Benefit You

Soft inquiries are not just harmless—they’re helpful!

• Credit Monitoring

  Apps like Credit Karma and Experian let you check your credit score without penalty.

  
  

• Pre-Approval Offers

  Many lenders provide pre-approval based on a soft pull, so you can explore options risk-free.

Tips for Managing Credit Inquiries

1. Be Strategic About Applications

   Only apply for credit when necessary and after researching the best options.

   
   

2. Leverage Tools Like Experian Boost

   Experian Boost allows you to add utility and telecom payments to your credit history, helping improve your score quickly.

Take Control of Your Credit

Understanding hard and soft credit inquiries is a small but powerful step in managing your financial future. Whether you’re planning to apply for a loan or just keeping tabs on your score, knowing how inquiries affect your credit is key.

Ready to boost your credit score and navigate inquiries like a pro? Contact New Beginnings Credit Solutions today for a FREE consultation! (Valued at $199)