A common belief is that every time anyone looks at your credit, your score takes a hit. That is not how it works. A soft inquiry, such as checking your own credit or a card issuer screening you for a mailed offer, does not affect your credit scores. A hard inquiry, which generally happens when you apply for new credit and the lender pulls your report to make a decision, can lower your scores slightly, usually for a limited time. The difference comes down to why the report was pulled, and you can see both kinds of inquiries on your own credit report.
What a credit inquiry is
An inquiry is a record that a company requested your credit report. Each of the three nationwide credit bureaus, Equifax, Experian and TransUnion, logs the request with the company name and the date. Not every lender checks all three bureaus, so an inquiry can appear on one report and not on the others.
The record itself is neutral. What matters is how scoring models treat it, and that depends almost entirely on whether the inquiry is hard or soft. The quick comparison below covers the main differences; the sections after it explain each one.
| Hard inquiry | Soft inquiry | |
|---|---|---|
| Typical trigger | You apply for credit and the lender reviews your report to decide | Your own check, a prescreened offer, a review by a company you already do business with |
| Effect on credit scores | Can lower scores slightly, for a limited time | None |
| Who can see it | You and companies that pull your report | Generally only you |
| Your permission | Generally given when you apply | Often not needed |
Hard inquiries: when you ask for credit
A hard inquiry is created when you apply for credit and the lender checks your report as part of deciding whether to approve you and on what terms. Typical examples are applications for a credit card, an auto loan, a mortgage, a personal loan or a private student loan. You generally authorize this check when you submit the application, often by agreeing to terms that mention a credit review.
Some situations are less clear. Asking for a credit limit increase can lead to a hard or a soft inquiry depending on the issuer. Applications for an apartment, a phone plan or a utility account can go either way too. When it matters to you, ask the company before you apply which kind of check it uses.
Hard inquiries are visible to other lenders who pull your report. A lender reviewing a new application can see that you recently applied elsewhere, which is part of why they count.
Soft inquiries: when no credit decision depends on it
A soft inquiry is a look at your report that is not tied to an application you made. The most common types are:
- checking your own credit report or credit score, through a bureau, your bank or a monitoring service;
- prescreened credit offers, where an issuer asks a bureau for a list of people who meet certain criteria;
- account reviews by lenders you already have accounts with;
- most prequalification tools that estimate whether you are likely to qualify for a card;
- some background checks, such as an employer's review, which requires your permission.
Soft inquiries appear on the version of the report you request for yourself, often in a separate section. Lenders reviewing your file generally do not see them, and credit scores do not count them. That is why checking your own credit as often as you like does not cost you anything on your score.
How long a hard inquiry stays and how much it counts
A hard inquiry generally stays on your credit report for up to two years. FICO scores consider only hard inquiries from the last 12 months, and their effect tends to fade well before they leave the report. For most people with an otherwise established credit history, a single inquiry has a small and temporary effect.
What changes the picture is a cluster. Suppose, as a hypothetical, one person applies for one card in a year while another applies for four cards within two months. Each card application generally creates its own hard inquiry, so the second person has four recent inquiries plus several new accounts that lower the average age of their accounts. Scoring models tend to read several new credit requests in a short time as a sign of higher risk, and lenders reviewing the next application may read it the same way.
Loans are treated differently from cards on this point. When you shop for a mortgage, an auto loan or a student loan, scoring models typically group several inquiries made within a short window into one, so comparing rates does not multiply the effect. Credit card applications generally do not get that treatment.
Prequalification, preapproval and prescreened offers
These three terms sound like approvals, and none of them is one.
- Prequalification is usually something you request: you enter some information on an issuer's site and it tells you whether you appear to be a match. Most of these tools use a soft inquiry, and the disclosure on the page usually says so.
- Preapproval is a term issuers use in different ways. Sometimes it means a prescreened offer, sometimes it means a prequalification result.
- Prescreened offers are the ones that arrive in the mail or by email. The issuer selected you through a soft inquiry based on criteria it set.
In all three cases, the formal application that follows usually triggers a hard inquiry, and the issuer can still decline it after reviewing your full report and the information you provide. If you prefer not to receive prescreened offers, the credit bureaus run an opt-out service that the Federal Trade Commission points consumers to. The article on factors that impact your credit card approval chances beyond your credit score covers what else an issuer looks at during that review.
What scoring models look at and what they ignore
Inquiries are a small piece of how scores are calculated. Scoring models put far more weight on whether you pay on time, how much of your available credit you are using and how long you have had credit. Recent hard inquiries fall under a smaller category often described as new credit, together with how many accounts you have opened recently.
What the models generally ignore is just as useful to know:
- soft inquiries of every kind, including your own checks;
- prescreened offers you received but did not respond to;
- account reviews by your existing lenders;
- hard inquiries older than the period the model considers.
If your goal is a stronger score, inquiries are rarely the first place to look. The guide to strategies to boost your credit score without opening new credit cards covers the factors that carry more weight.
Common mistakes with inquiries
Most problems with inquiries come from a handful of misunderstandings:
- Not checking your own credit for fear of lowering your score. Your own checks are soft inquiries. Avoiding them only means you see problems later.
- Applying to several cards to see which one approves you. Each application is likely a separate hard inquiry, and a decline does not remove the inquiry. Using prequalification tools first is the lower-impact way to compare.
- Assuming a check was soft. If an apartment, phone or utility application matters to you, ask before you apply instead of finding out on your report.
- Ignoring an inquiry you do not recognize. It may be a lender listed under a parent company name or a dealership that sent your application to several lenders. If it is not, it can be a sign that someone applied for credit in your name.
How to check the inquiries on your own report
Your own credit report is the place to see exactly which inquiries are on file. You can get free reports from all three bureaus at AnnualCreditReport.com, the official site for free credit reports. Open the inquiries section of each report; hard and soft inquiries are usually listed separately, and the labels for each vary by bureau.
For each hard inquiry, check that you recognize the company and the date. If one does not match an application you made, contact the company that pulled the report and ask why, then dispute the inquiry with the bureau that lists it. If the inquiry is part of a larger problem, such as accounts you did not open, consider placing a fraud alert or a credit freeze with the bureaus, which stops new creditors from accessing your report until you lift it. A freeze does not affect your existing accounts or your own access to your reports.
