Can “Soft” and “hard” credit inquiries hurt your credit score?
When it comes to CreditKeeper, there are many misconceptions that most people believe to be true. For an example, there are many people who will not attempt to obtain their credit score because they believe that the inquiry itself will actually lower their credit score. This is not the case; however, most consumers do not understand credit score “hits,” which are inquires about information on your credit report or requesting the report itself.
There are two different types of credit score keeper inquires, which are commonly labeled by lenders as “hard and soft hits.” Hard hits are the type of inquiry that will affect your credit score and possibly lower the points that make up your score. Since they present the most effect and cause so to speak, we will discuss these “hits” first. When you take out a loan or apply for credit of any kind, the lender will request a copy of your credit report. In order to get a quick response to your loan or credit application, they lender will obtain your credit report faster. This is a hard hit on your credit report.
Your credit score will be affected, but should not drop too far. However, should you apply amongst multiple credit or loan lenders, they will all need to be able to request and access your credit report and therefore, multiple hard hits to credit score will be made. This, in turn, has a greater effect on your credit score and could lower it substantially. This occurs because it appears risky, as you are applying for different sources of credit in a short period of time. The only time a lot of “hard hits” may not lower your overall score is if you are shopping for interest rates and that information is specified upon request when the inquiries are made so close together. Remember to be careful when applying for credit, as hard inquiries will remain for two years on your credit report. Hard hits are important when listed on your credit score report, so choose your who makes these inquiries and often, wisely.
The other type of “hit” or inquiry involved in obtaining your credit report is a “soft” hit.
Soft hits are harmless to your report and will not lower your credit score. A perfect example of a soft hit is requesting a copy of your own credit report. Obtaining your credit score annually is encouraged in order for you to keep up to date with your credit score and the activity on your credit report. Most people do not know this and do not keep up with their credit report because they feel their credit score will take a hard hit. That is not the case, so please note- get your credit report and keep up with it frequently. Credit Keeper’s credit monitoring is a great way to do this each month.
Although lenders requests for your credit report are considered “hard” hits, other companies have access to your credit report as well. If existing lenders and insurers want to extend your credit limit or offer you other types of credit, they can access your credit report as well. These inquiries are considered “soft” hits and will not lower credit score. You are not requesting their credit, yet they are offering so your credit score will not suffer and drop lower in points. Be aware, these inquiries, even if soft, will still show up on your credit report. Because the Fair Credit Reporting Act protects your rights as a consumer, you can choose to “opt out” of these offers so they will not show up on your credit report at all. To do so, visit www.optoutprescreen.com.