What Is a Credit Inquiry?
Simply put, the record of a request for your credit report is called a credit inquiry. But there are two types of credit inquiries, and one can affect your credit score by lowering it a few points, while the other will have no effect on your score at all.
Credit Inquiries
When you check your credit report from any of the three national credit bureaus, you may see something on it under the “inquiry” section. This happens when an entity (a business or individual) requests to see your report. The credit report will tell you who accessed your credit data and when. However, not just anyone can view your credit history. For example, you will see lenders or credit card issuers listed under inquiries if you gave them permission to do this by applying for credit with them.
If you’re applying for a job or shopping around for insurance and you’ve given permission, these companies may request your credit report to provide an insurance quote or use the information as part of a background check.
Sometimes, however, these inquiries may happen without your knowledge or permission. But we’ll get into that in a minute.
Keep in mind that inquiries typically stay on your credit report for about two years, but only factor into your FICO credit score for one year.
Will All Inquiries Hurt Your Credit Score?
Getting back to the permission issue, it’s important to understand that not all credit inquiries are equal. Soft inquiries - that can happen both with and without your permission - will not affect your credit score. However not just anyone can access this information. Examples of soft credit inquiries include:
You checking your own credit report
One of your current creditors checking your report as part of an account review.
An insurer checking your credit as part of the quote process.
As part of the job application process, and with your permission, a company may view your credit report as part of a background check.
You put in a request to prequalify for credit offers (or a pre-approval if the lender states that it will not affect your credit score).
A lender, without your permission, checks your credit to pre-qualify you for a loan or credit card offer
In addition to having no effect on your credit score, only you can see these soft inquiries on your report - no one else.
On the other hand, a hard inquiry is the result of a request from you for credit, such as a mortgage, credit card or auto loan application. Each one of these requests for credit will appear on your credit report as an inquiry, all of them will lower - and too many of them could seriously affect - your credit score.
14 Day Window
Fortunately, you can breathe a bit if you're rate shopping by applying with multiple lenders to get the best interest rate. Applications for the same type of loan within 14 days under the VantageScore model count as a single hard inquiry on your credit report. The latest version of the FICO score expands this to 45 days, but since a particular lender may be using the VantageScore, it’s still best if you stick to completing all applications within14 days.