Hard And Soft Inquiries On A Credit Report In Waterdown
Hard And Soft Inquiries On A Credit Report In Waterdown
Posted on May 25, 2021
If you’re preparing for a car loan in Waterdown, you will have come across the terms hard inquiry and soft inquiry when looking at credit reports. But what are they? How do they affect your credit score and what do you need to know about them?
Our Waterdown car loan team explains everything you need to know about are hard and soft inquiries on a credit report.
Lenders, credit card companies, insurers and other organizations make inquiries on a credit report whenever you apply for a car loan, insurance, credit card or other financial product.
Depending on the inquiry, it will either be hard or soft.
Hard inquiries on credit reports
Hard inquiries are performed on your credit report when you make a credit application of some kind. They reflect a full check by an organization on your credit report and are noted on the report for around 2 years.
A hard inquiry will include carefully checking any or all aspects of your credit report. Everything from how many credit cards you have to how much you still have to pay on your mortgage.
Typically, a lender will request to see specific areas but sometimes they will check everything.
The hard inquiry is recorded to let other lenders know you have applied for credit. Too many hard inquiries in a short space of time means you have applied for a lot of credit in that period. That’s something a lender is going to want to know, hence it being recorded.
Hard inquiries can cause a slight dip in your credit score as it indicates you’re taking on more credit. If you don’t take out the loan, credit card or whatever, your score will recover.
As hard inquiries are more detailed checks, a lender need
s your permission to undertake one.
Soft inquiries on credit reports
Soft inquiries are typically run for other checks not related to credit applications. For example, car insurance, utility companies, cell phone companies and other organizations may want to check whether you are creditworthy or not.
A soft check does not show every detail of your credit report. It will show how much credit you have, how many lines of credit, your payment history and whether you have any bankruptcies or court actions against you.
It will not go into detail in the same way a hard inquiry does.
A soft inquiry is only visible to you and not to anyone else who performs a check on your credit report.
As soft inquiries are not related to actual credit applications, they do not need to be recorded in the same way so won’t impact your credit score.
Checking your own credit report is a soft inquiry and will not appear on your report or impact your score in any way.
As soft inquiries are basic checks, an organization doesn’t need permission to run one.
We hope that explanation helps you understand hard and soft inquiries. Next time you’re shopping for a car loan in Waterdown, you’ll know exactly what it means!
For any questions, concerns, or inquiries. Please don’t hesitate to contact us here!
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