So what is an inquiry on your credit report?

Credit inquiries are requests by a legitimate business to check your credit. With that being said, there are two different types of inquiries. We have soft inquiries then we have hard inquiries. There are a couple of simple differences in the two. Soft inquiries come from things such as credit monitoring or identity theft protection. These are normally from credit monitoring sites such as creditkarma.com, Experian.com, myfico.com, etc.

When someone obtains your Credit Report and gives you a soft inquiry it does no harm to your credit score. It is not shown on your report that someone checked it with a soft inquiry. On the other hand, a hard inquiry does hurt your score. A hard inquiry hits your credit report when a Real Estate company, mortgage company, car dealership, credit card company, or furniture store for example check your credit report to see if you qualify for the financing on what they are selling. Hard inquiries do hurt your score unlike soft inquiries.

Luckily these inquiries only stay on your actual report for 24 months then they are taken off and no longer affect your score. The credit bureaus do give you a little bit of padding on your inquiries. They say that it is average to have about 6 inquiries over the span of 2 years. Hard inquiries on your credit report make up about 10% of your overall score. We have found through our research that each hard inquiry hurts your score about 5 to7 points depending on your specific credit mix.

When applying for credit you want to be cautious with the number of inquiries that you acquire. For example, when I went to the car dealership to purchase a new vehicle a couple years back I wanted the best possible rate and the lowest payment. What the salesperson at the dealership failed to mention to me that he was trying 8 different banks with my credit application. A few weeks later I checked my credit report and had around 10 different new hard inquiries.

Although I gave him consent to check my credit and see what kind of interest rate I could get approved for, he never informed me that I would receive a whole list of new inquiries.

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