The Difference Between Hard And Soft Credit Inquiries

The Difference Between Hard And Soft Credit Inquiries

Posted on April 21, 2021

As soon as you begin researching car loans in Ayr, you will quickly come across the terms hard and soft credit inquiries. But what do they mean and how do they impact the car loan process?

The two terms can impact your credit score so understanding the difference can make a real difference to how successful your car loan application will be. So let’s outline each and what they mean.

Hard inquiries

Hard inquiries are also known as ‘hard search’ or ‘hard credit check’. They are performed during a car loan application and are when an organization takes a good look at your credit report.

A hard inquiry will show everything on your credit report including the amount and type of debt you have, your payment history and your entire financial history as recorded by the report.

As hard inquiries are usually performed when applying for finance, they are recorded on your credit history to inform other organizations that you have applied for credit of some kind.

One or two hard inquiries within a short period of time should not make a difference. Several hard inquiries within a short period of time will cause lenders to ask questions about why and can (and often will) negatively impact your credit score.

A hard inquiry will usually stay on your credit report for 12 months.

Soft inquiries

Soft inquiries are also known as ‘soft search’ or ‘soft credit check’. They are performed during car loan preapproval or when an organization wants to verify your ID, payment history or credit score.

Soft inquiries do not happen during loan applications so there is no need for everyone else to see it. They will appear on your credit report but will only be visible to you or when an organization performs a hard inquiry.

Therefore, soft inquiries do not impact lending decisions or your credit score.

A soft inquiry will show your current level of debt, any current loans or borrowing and your payment history. An organization has to request a part of your credit report to see so they won’t necessarily see all of these, just whatever information they request.

Managing inquiries on your credit report

You can have as many soft inquiries on your credit report as you like as you will be the only one who sees them. As they are not part of a loan application, they are of no interest to most lenders.

Hard inquiries on the other hand, are of interest. Try to minimize hard inquiries as much as possible.

If you’re looking into car loans, only ever apply for the loan you want. Car loan preapprovals will usually only ever use a soft inquiry, so won’t impact any future borrowing. Some go further, so check before you get preapproved.

Once you have identified the best deal on a car loan in Ayr, apply for that loan and only that loan to minimize the impact on your credit score.

Better still, prepare your application and let us do it for you!

Contact Unique Chrysler for help, advice and competitive Ayr car finance and leasing.

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