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Credit inquiries are records of when a lender or creditor checks your credit report. They can impact your credit score and are important to understand for managing your financial health. There are two main types of inquiries: soft and hard. Knowing the differences helps you interpret your credit report accurately.
Types of Credit Inquiries
Soft inquiries occur when you check your own credit report or when a lender pre-approves you for offers. These do not affect your credit score. Hard inquiries happen when you apply for new credit, such as a loan or credit card. These can lower your score temporarily.
Rules Governing Credit Inquiries
Credit bureaus typically record inquiries for up to two years. However, only inquiries within the past year usually impact your credit score. Lenders are allowed to perform multiple inquiries if you are shopping for the best rates, but they are encouraged to do so within a short period to minimize score impact.
What You Can Do
If you notice unfamiliar inquiries on your report, you can dispute them with the credit bureau. Regularly reviewing your credit report helps you identify potential fraud or errors. Limiting the number of new credit applications can also help maintain your credit score.