An inquiry is a credit check conducted by lenders, companies, or yourself. There are two types: soft inquiries and hard inquiries. Soft inquiries, like checking your own credit or pre-approvals, don’t impact your credit score and are only visible to you. Hard inquiries occur when applying for loans or credit cards and can slightly lower your credit score, staying visible to lenders for up to two years.
1. Soft Inquiry:
- Impact on Credit Score: Does not affect your credit score.
- Purpose: Often done as part of background checks, pre-approval offers, or when you check your own credit score.
- Examples: When a lender pre-approves you for an offer, or when you check your credit report yourself.
- Visibility: Visible only to you on your credit report, not to lenders.
2. Hard Inquiry:
- Impact on Credit Score: Can slightly lower your credit score.
- Purpose: Occurs when a lender checks your credit report to make a lending decision.
- Examples: Applying for a loan, mortgage, or credit card.
- Visibility: Visible to lenders and stays on your credit report for up to two years.
In summary, soft inquiries are harmless and don’t affect your credit score, while hard inquiries can have a minor, temporary impact.