How Credit Checks Affect Your Credit Score
March 15, 2019
Like many other things, credit checks affect your credit score. However, it all depends on what type these checks are. They can either be a soft credit check which has no impact or a hard credit check that can negatively affect your score.
With that in mind, let’s first take a look at the difference between the two.
The Main Difference Between Hard and Soft Inquiries
There are many differences between the two, but there are some variances between them. Here is a better understanding:
- Soft credit checks are usually used by creditors to send you pre-approval offers, while a hard-check most commonly occur once you apply for a loan or a credit card.
- Soft checks do not show your entire credit history to creditors while hard-checks do.
- Soft checks do not affect your credit score, neither positively or negatively, while hard-checks can decrease your score by one to five points.
- Other creditors can never see soft credit checks while hard ones stay on your report and can be viewed by lenders for many years.
Everything You Need to Know About Hard Checks and How They Work
Creditors usually use hard checks to determine your creditworthiness. By doing a hard query, they can see whether or not you should receive a credit card, a loan, or a mortgage. Even by signing up for a new phone can you sometimes become a target of a hard check.
The good thing here is that a hard check is never performed at random, there always needs to be an activity first on your end that will trigger a hard credit inquiry.
Naturally, if you feel a hard credit search was unauthorized or shouldn’t have been done, you can always dispute it, and if you’re successful, it will be removed, and it will thus have no effect on your credit score.
How Hard Credit Checks Affect Your Score and How to Deal With Them
As we previously said, a hard credit search can only affect your score by one to five points. However, if you’re on the border between good and poor credit, that one investigation can be detrimental and lead you into the poor credit zone.
It’s also worth mentioning that despite the searches remaining on your report for two years, the point deduction is gone after only one year.
As there is no way for you to remove a credit inquiry if it was authorized, you should focus on preventing more from occurring. Such prevention is essential as only three or more requests in two years can already cause creditors and lenders to avoid you.
The only solution is thus to avoid doing things that will cause them to perform credit checks.
If you want to know more about this matter and other things that can help you with your finances, you should visit our site and read some of our posts. You can also apply online for an easy to obtain low interest loan.