Hard Inquiry Vs Soft Inquiry: The Impact On Credit Score

Monitoring one’s credit score regularly is not just a smart move but also safe. It is recommended that an individual keep an eye on their credit reports to catch errors early and stay informed about any changes.

Unlike a hard inquiry, which can shave points off an individual’s credit score, checking their report triggers what’s known as a soft inquiry, and it has no impact on an individual’s credit rating.

Hard credit inquiries typically occur when an individual applies for new credit or a financial product. Common examples include mortgage applications, auto loans, credit card applications, student loans, personal loans, and even apartment rental applications. These types of credit checks can cause a temporary dip in an individual’s credit score, as they indicate that they are actively seeking new credit, as per various NBFC official websites.

On the other hand, soft credit inquiries do not affect an individual’s credit score and are often initiated without a formal application. These include checking their own credit score through various platforms like Bajaj Finserv, receiving ‘prequalified’ credit card or insurance offers, and undergoing employment-related background checks for verification purposes.

Soft inquiries are considered safe for an individual’s credit score. In fact, they’re encouraged because they help consumers stay informed and catch inaccuracies before they do damage.

Meanwhile, hard inquiries are used when lenders check a credit score when making a decision on lending. It usually comes into the picture when someone applies for a mortgage, loan, or credit card, and it needs authorization from the borrower.

Unlike soft inquiry can bring the hard inquiry down by a few points, or in some instances negligible impact on the credit score. 

Another benefit of soft inquiries could be that they're private. Lenders can't see them, so consumers won’t suddenly start receiving unsolicited loan offers. Hard inquiries, however, can attract attention from agents looking to sell financial products based on an individual’s recent credit activity.

Checking a credit report doesn’t just give the cardholder insight, it also protects an individual’s financial health. And because it doesn’t lower credit scores, there’s no downside to doing it frequently.