Do Soft Inquiries Affect My Credit Score?

By the Pachyy Editorial Team The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.

Good news! Soft inquiries do not impact your credit score, so you don’t have to worry about losing any points. However, soft credit checks may still be visible on your credit profile. On the other hand, hard credit inquiries usually result in a minor decrease of 5 points or less in your score.¹ If you want to know more about how your credit score and financial report are affected when you submit a loan application, we’ve got you covered. Check out the information below!

Soft Credit Check vs. Hard Credit Check: Understand the Difference!

It’s really important for you to be aware of the distinction between soft and hard credit checks. Having a clear understanding of how these inquiries impact your credit score can empower you to make smarter financial choices.

Soft Credit Check — A soft credit check happens when either you or an authorized party examines your credit profile as part of a background check. For instance, this occurs when you inquire about quick cash loans to determine if you are eligible for pre-approval. The good news is that soft inquiries have no impact on your credit score and usually don’t show up on your credit profile.
Hard Credit Check — A hard credit check takes place when you apply for a new credit card, loan, or mortgage. It is performed by the financial institution to review your credit reports and make a decision on whether to approve your application. Unlike soft credit checks, hard inquiries do have a negative impact on your credit score.

How Long Does a Credit Check Stay on a Credit Report?

Did you know that both hard and soft credit inquiries can show up on your credit report? Don’t worry though, I’ll explain how long they stay visible to lenders. Hard credit inquiries will stay on your credit report for a maximum of two years. But here’s the good news: after those two years, the credit bureau will remove the hard credit check from your report. Plus, the impact on your FICO score will only last for a few months, up to one year. Just be careful about having too many hard inquiries in a short period of time, as that can have a bigger negative effect on your credit. Soft inquiries, on the other hand, usually don’t appear on your credit report. However, if you do happen to see a soft inquiry, no need to stress! It won’t affect your credit score at all. And just like hard inquiries, you can expect soft inquiries to disappear from your credit profile within two years.

What to Do If You Find an Inaccurate Inquiry on Your Credit Report?

Good news! You can easily resolve any errors on your credit report. The three major credit bureaus are here to help you. They offer consumers one free financial report every year. Here’s how you can get your free credit report from each bureau every twelve months: – Visit the Annual Credit Report website or call (877) 322-8228. If you happen to see an unfamiliar inquiry on your report that you didn’t authorize, don’t worry. It can be corrected. Here are the steps you can take to file a dispute with any of the three credit bureaus:

Call Equifax at (800) 864-2978
Call Experian at (888) 397-3742
Call TransUnion at (800) 916-8800

You can also mail a detailed letter or dispute form to the credit reporting agency. Alternatively, submit a dispute form online through the respective credit bureaus’ website. They are designed to make this process as easy as possible. Once the credit bureau with the error receives your dispute, they will start an investigation. In most cases, you can expect a response within 30 days. If the inquiry is indeed an error, they will promptly remove the inaccurate information from your report. Remember, it’s important to keep an eye on your credit report and take action if you find any inaccuracies. This will help ensure your credit history remains accurate and up-to-date.

Should I be concerned about checking my credit score or credit reports?

Don’t worry! Checking your own credit score or reports won’t have any negative impact on your credit. It’ll be considered as a soft inquiry, which doesn’t affect your financial history! Experts recommend that you review your credit scores and reports at least once a year. Regularly checking your credit reports ensures that all the information is accurate and there are no fraudulent accounts under your name. If you notice any suspicious or unusual activity, it’s important to freeze your credit reports for all three bureaus and report it as possible identity theft. Keep yourself protected!

What Kind of Information Do Lenders See on My Credit Reports?

When you give consent for credit checks, lenders are able to access your credit reports. These reports provide detailed summaries of your financial activities. There are three main credit bureaus: Equifax, Experian, and TransUnion. Each bureau maintains a record of your financial information and shares it with lenders, employers, insurance providers, landlords, and others. However, it’s important to note that the Fair Credit Reporting Act (FCRA) requires businesses to have a “permissible purpose” for viewing a consumer’s credit report. So, what personal information do you find in a credit report?

Personal Information – Your credit reports contain basic personal details such as your name, date of birth, current and previous residential addresses, phone numbers, and Social Security number.
Financial Accounts – Your credit report shows your current and past financial accounts. Even if you have closed loans or credit card accounts within the last ten years, they may still appear on your report. Each account includes a date and status, indicating whether it is open, closed, or past due.
Payment History – Lenders can review your payment history for each account when they check your report. Payment history is crucial, as it directly impacts your credit score and eligibility for financing. To improve your payment history, consider setting up automatic payments or using bill reminders.
Credit Inquiries – Both hard and soft inquiries will show up on your report for up to two years. Lenders and credit card issuers are able to see which company requested your information and the date of the inquiry.
Public Records – Your credit reports may also include public records like bankruptcies, liens, and foreclosures. Most negative financial information remains on your report for up to seven years.

What Factors Affect Credit Scores Besides Hard Inquiries?

When it comes to credit scores, it’s not just hard inquiries that can cause a dip. Your credit scores depend on credit scoring models, like VantageScore and FICO, which use different factors to calculate your level of financial risk. Let’s explore these factors:

Factor	Description	Percentage Impact on Credit Score
Payment History	Reflects how consistently you pay your bills on time.	35%
Total Debt	The amount of debt you have in relation to your credit limits (credit utilization).	30%
Length of Credit History	The duration of your credit accounts, with longer histories generally being more favorable.	15%
New Credit Inquiries	The number of recent hard inquiries or credit checks, like when applying for a loan or credit card.	10%
Credit Mix	The variety of credit accounts you have, such as credit cards, mortgages, and installment loans.	10%

Factor 1: Your Payment History

Your payment history contributes to 35% of your total FICO score. By consistently paying your bills on time, you can expect to have a good credit rating or even higher. Late payments can lower your score and appear on your credit reports, so it’s important to avoid missing due dates.

Factor 2: Your Total Debt

Having some credit card debt is normal for most consumers. However, it becomes a concern when you utilize more than 30% of your available credit. If you’re aiming to build good credit, it’s crucial to reduce the amount of debt you carry.

Factor 3: Length of Your Credit History

The length of your credit history contributes to 15% of your credit score. Your credit history is something you can’t actively fix, but keeping accounts open can help you maintain a longer average credit history.

Factor 4: New Credit Inquiries

The number of hard inquiries you make within a year affects your credit by 10%. Each hard credit inquiry can lower your credit score. However, most credit scoring models only count one inquiry if you apply for one type of loan with multiple lenders. For example, if you’re looking for an auto loan and apply with multiple lenders, you’ll only have one hard inquiry on your credit report!

Factor 5: Credit Mix

The types of financial accounts you have contribute to 10% of your credit score. Responsibly managing a mix of revolving credit (like credit cards) and installment credit (like mortgages and loans) can improve your credit rating. However, having a credit mix isn’t necessary for building a good credit score.

Frequently Asked Questions about Credit Inquiries

What is the difference between a soft credit inquiry and a hard credit inquiry? A soft credit inquiry is a check on your credit profile that does not impact your credit score. It is commonly used for background checks or pre-approvals. On the other hand, a hard credit inquiry is a more thorough examination of your credit by lenders when you apply for credit, and it can affect your credit score. If I am shopping for an auto loan, will every inquiry affect my credit score? If you apply for multiple auto loans within a short period (typically 14 to 45 days), credit scoring models consider them as a single hard inquiry. This is designed to encourage rate shopping without heavily impacting your score. How long does a hard inquiry stay on my credit report? A hard inquiry remains on your credit profile for up to two years. However, its impact on your credit score diminishes over time, usually within a few months to a year. Can I dispute a hard inquiry if I did not authorize it? Yes, if you notice a hard inquiry on your report that you did not authorize, you have the option to file a dispute with the respective credit bureau. They will review it and potentially remove it from your report. How many hard inquiries are considered too many? While there is no set number, financial experts generally advise against having more than six hard inquiries within a year. Multiple hard inquiries in a short period can significantly affect your credit score. If I am denied credit after a hard credit inquiry, can I find out why? Yes, if you are denied credit due to information on your financial report, the lender is required to provide you with an “adverse action notice” that explains the reasons for the denial. This can give you insights into which areas of your credit profile to improve.

Learn about Soft Credit Checks: A Summary

If you’re thinking of applying for a new loan or credit card, it’s a good idea to look for lenders that offer pre-approval estimates. These estimates are based on a soft credit check, which doesn’t impact your credit score. Soft credit inquiries allow you to compare different loan offers without any negative effects on your credit rating. Pachyy installment loans are a convenient and fast option for funding. We consider more than just your credit score when determining eligibility, so feel confident in applying for our online loans today! For more information, you can check out the following references: