Outlook Money
Applying for a loan can involve a credit enquiry. But not every enquiry affects your credit score, so knowing the difference can help.
A soft enquiry happens when you check your own credit report or a lender makes a preliminary assessment. It does not affect your credit score.
A hard enquiry usually happens when you formally apply for a loan or credit card. The lender checks your credit report before making its decision.
One hard enquiry is generally not a major concern. However, several loan or credit card applications within a short period can affect your score.
Multiple applications may make lenders think you are seeking credit from several sources. This can raise concerns about your financial position and borrowing behaviour.
Compare interest rates, fees and eligibility requirements before applying. Checking whether you qualify first can help you avoid unnecessary formal credit applications.
Regularly reviewing your credit report helps you track your score and spot enquiries you don't recognise. If something looks unfamiliar, contact the lender and credit bureau.