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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. There are few credit topics that cause as much confusion among consumers than the subject of credit checks, or inquiries. You’ve probably heard some of the myths about how inquiries can harm your credit score. As a result, you may find yourself wondering how inquiries really do impact your credit profile. Whether a credit check has the potential to damage your credit scores comes down to one key piece of information: Is the credit inquiry hard or soft? What is a credit inquiry
An inquiry is a record on your credit report that shows who accessed your credit information and when they did so. The – Equifax, TransUnion, and Experian – are to disclose (upon request) a record any time access to your credit report has been granted. What is a hard inquiry
Certain types of credit checks have the potential to damage your credit score (though that doesn’t mean credit score damage is guaranteed). These credit checks are commonly referred to as hard inquiries. Typically, hard inquiries occur when you apply for new credit or services. A few examples of hard inquiries include: A lender checks your credit as part of a loan or credit card application. A collection agency trying to locate you checks your credit for skip tracing purposes. Your credit card issuer checks your credit because you request a credit limit increase. The reason lenders and scoring models care about the number of hard inquiries on your report is simple: Too many hard inquiries can indicate higher credit risk. However, before you get too worried about the damage a hard inquiry might cause your credit score, remember that inquiries are only worth a small percentage of your overall credit score. According to both and , companies that calculate credit scores used by lenders, inquiries generally won’t have a huge influence on your credit scores. is worth 35 percent of your FICO Score. Your credit utilization, or the ratio of your outstanding credit card balances to your credit limit, is largely responsible for another 30 percent. Inquiries, by comparison, only account for a portion of the new credit category of your credit reports. The whole category is worth 10 percent of your credit scores, and inquiries only make up part of that amount. What is a soft inquiry
A soft inquiry is a credit check that does not damage your credit score in any way. In fact, if a lender checks your credit, soft inquiries will not show up on the lender’s copy of your credit report at all. Soft inquiries are only viewable on consumer disclosure reports, which are credit checks you initiate yourself. A few examples of soft inquiries include: You check your own credit report. A lender checks your credit as part of a preapproval screening. Your existing creditor checks your report for account maintenance reasons. An employer pulls your credit for employee-screening purposes. An insurance company checks your credit to determine eligibility or pricing for a new policy. The worst credit myth of all is the idea that checking your own credit might harm your scores. It’s completely false. You can check your own credit report any time and it will never affect your scores. Not only can you check your credit reports without fear of credit damage, you should check them. Checking all three of your credit reports often is essential to make sure they are accurate and free of any suspicious activity. (Note: if you discover unauthorized inquiries on your credit report, it could be a sign of identity theft.) Keep credit checks in perspective
It’s true that you should care about all of the factors that influence your credit scores. However, it’s important to understand that just because something can affect your score doesn’t mean it will affect it greatly. Additionally, inquiries have a short shelf life when compared with other types of information on your credit reports. Inquiries only remain on your reports for 24 months. Plus, once a hard inquiry is 12 months old, it won’t be factored into your scores. Instead of obsessing over inquiries, pay attention to the factors that matter far more, like payment history and credit utilization. Only apply for new credit when you need it. You don’t have to be afraid to apply for new credit when you need financing or can get a better deal. However, you’ll probably want to avoid applying for new credit in order to score a discount on every purchase you make. Learn more
SHARE: Michelle Lambright Black is a credit expert with over 19 years of experience, a freelance writer and a certified credit expert witness. In addition to writing for Bankrate, Michelle's work is featured with numerous publications including FICO, Experian, Forbes, U.S. News & World Report and Reader’s Digest, among others. Megan Harney Related Articles