What Is A Credit Inquiry?

March 3rd, 2011

hard-vs-soft-credit-inquiries-blogWhen you apply for credit from a mortgage company, credit card providers or an auto finance company, you authorize them to “inquire” to a credit bureau to get a copy of your credit report. You would later notice that their credit inquiries show as an “inquiry” on your credit report.

Fair Isaac Corporation developed the technologies behind credit scores, which is why lenders may refer to your credit score as your “FICO score.” Fair Isaac Corporation says that for inquiries for a new mortgage made in a short period, usually inquiries within a 30 day period, they will count as only one inquiry. In other words, if you call several mortgage providers shopping around for a mortgage and they each pull your credit report, it will NOT drastically pull your credit score down due to multiple inquiries. However, if you were to make numerous credit inquiries for new credit cards within a short period, that would be a red flag, those inquiries would all be counted as separate inquiries, and your credit score would fall.

Multiple credit card inquiries are seen as a red flag because you could be taking on a lot of new debt load, or the ability to run up your debt load, which could negatively impact your debt ratio. It could also mean you have lost your mind, and have decided you need multiple new credit cards to take your dream vacation, buy a new wardrobe, get new furniture and buy a big screen TV, all at once, and all on credit!

Also, there are two types of inquiries, hard and soft:

“Hard” Credit Report Inquiry: These inquiries stay on your credit report for a period of time. They are made by lenders, landlords, credit card providers, service providers and insurance companies. They will remain on your credit report for one to two years. Having one or two hard inquiries is okay, but if you have multiple hard inquiries (especially within a short time period), your credit scores will likely go down (unless they are mortgage related, as mentioned above). This is why it is a bad idea to apply for numerous store credit cards around the holidays, for example.

“Soft” Credit Report Inquiry: This is an inquiry that is not revealed to creditors and lenders, and they do not affect your credit score. They are recorded when you request your own credit report to check your score, or when your employer requests it.

The above are the important things to know about credit inquiries. Feel free to ask more questions if the above does not satisfy your curiosity about what is a boring topic, unless you are thinking about applying for a mortgage.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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