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When a company/business reviews your credit report, they make an inquiry on the report that indicates the month and the year in which the credit report was checked. The credit bureau does not record the inquiries made on your report for you or other businesses viewing your credit report later on in the future. In fact, the Fair Credit Reporting Act stipulates that credit bureaus must keep a track record of any business checking your credit report.
When your credit report is checked, you will see a list of all inquiries made at the end of your credit report.
Although all these inquiries appear together in a list, there are two known types of credit report inquiries, and these are the soft enquires and the hard inquiries.
What are soft inquiries?
It may surprise you to see inquiries coming from companies or businesses for which you didn’t apply for credit. Some may be companies that you never knew existed. Not to worry though, these are probably soft inquiries and are not as serious as they may look.
These soft inquiries are sometimes called "soft pull." Moreover, they are carried out on your profile each time you check your credit report. Businesses run a check on your credit report mainly for promotional purposes or an existing business you have an account with might check your credit report. For instance, your credit card company may decide to check your credit report if they wish to send you an already pre-approved offer for a credit card. Other than your requests for your credit report, soft inquiries are always made without you permitting it. Soft inquiries do not have any effect on your credit score, and it doesn’t matter how many are made.
On the other hand, hard enquires are included in your credit report every time a company reviews your credit report whether to approve your credit card application, a loan or any other credit service request. Hard inquiries account for about 10% of your credit score. While it will remain on the credit report for two years, it will only affect your score for a year.
At other times though, a company might run a check on your credit report for reasons other than granting your loan. For example, a car rental company may sometimes check your credit report to know if you are using a major credit card or not. If in doubt of the type or to know which kind of inquiry has been used to pull your score, then you should ask the company pulling your credit report. It is recommended that you minimize the hard inquiries if you want to maintain good credit score, especially if you plan to apply for a large loan anytime soon.
The effect of soft inquiries on your credit report
It is known that soft inquiries are not added to your credit score. This means that you do not have to worry about such inquiries reducing your credit score. When lenders check your report, they will not see any of these soft inquiries. They will only see the hard inquiries. All of those unsolicited peeks by unknown companies won’t affect you.
However, if you retrieve a copy of your report and send it to a company for review, the soft inquiry will be displayed because it is your version of your report.
This article was written for GrandTetonProfessionals.com for InquiryBusters.com. For Media Relations, please contact Misty.Burrell@GrandTetonProfessionals.com and for Sales and Support, please feel free to reach out to us 24/7 by calling; 203-599-4157 or by email at Support@InquiryBusters.com