Consumers are often confused about the effect of inquiries on their credit scores. CreditCards.com consulted experts about the differences between hard and soft inquiries, how the big three credit bureaus’ report on inquiries, and inquiries’ effects on credit scores. Their experts explained that a hard inquiry means the consumer actively applied. for credit. Soft inquiries are reported anytime you review your own personal credit report, your credit is evaluated by existing creditors, or you receive a promotional credit card offer in the mail. Soft inquiries have no impact on your credit report or score.
How big of a hit on your score do hard inquiries create? It varies.“Applying for one credit card every so often is no big deal, but when you apply for more than one at a time, you look desperate for money that you don’t have to prove you have upfront, and that is why it can have a decent effect on lowering your credit score,” says Matthew Coan, owner of the credit card comparison website Casavvy.com.
The impact also depends on existing credit history. “The hit is usually about three to five points per inquiry” according to Priyanka Prakash, of FitBiz Loans. “While that may not seem like much, it adds up – particularly if you have borderline credit to start with. For some people, there’s no impact from a hard pull. In general, the shorter your credit history, the fewer accounts you have and the more recent inquiries you have, the greater the impact.”