When you apply for a loan or credit, lenders often perform credit inquiries to assess your creditworthiness. Understanding the difference between soft and hard credit inquiries is crucial because they impact your credit score differently.
Vizzve Finance explains what soft and hard credit inquiries mean and how they affect your loan application process.
What Is a Soft Credit Inquiry?
A soft inquiry occurs when your credit report is checked, but it does not impact your credit score. Common examples include:
Checking your own credit score
Pre-approved loan or credit card offers
Background credit checks by employers
Soft inquiries are visible only to you and don’t affect your ability to get credit.
What Is a Hard Credit Inquiry?
A hard inquiry happens when a lender checks your credit report as part of a loan or credit card application. This type of inquiry:
Can lower your credit score slightly (usually by a few points)
Stays on your credit report for about two years
Is visible to all lenders reviewing your credit
Multiple hard inquiries in a short period may signal risk to lenders and impact loan approval chances.
How Soft and Hard Inquiries Affect Your Loan Application
Soft inquiries: No effect on approval or interest rates.
Hard inquiries: May reduce credit score and affect approval or rates.
It’s important to minimize unnecessary hard inquiries when applying for loans.
Tips to Manage Credit Inquiries Wisely
Limit the number of loan or credit applications.
Shop for loans within a short timeframe (14-45 days) as credit bureaus often treat these as one inquiry.
Regularly check your credit report to monitor inquiries.
Use soft inquiry tools to check credit scores without harm.
How Vizzve Finance Helps You Navigate Credit Checks
Vizzve Finance ensures transparent communication about credit inquiries and guides you on managing your credit health during the loan application process.
FAQs
Q1. Does checking my own credit score affect my credit?
No, that’s a soft inquiry and does not impact your score.
Q2. How long do hard inquiries stay on my credit report?
They remain visible for about two years but impact your score mostly in the first year.
Q3. Can multiple hard inquiries lower my credit score significantly?
Several hard inquiries in a short time can lower your score and raise red flags for lenders.
Q4. Does Vizzve Finance perform hard or soft inquiries?
We inform you in advance and perform inquiries necessary for your loan approval.
Published on : 10th August
Published by : SMITA
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