Key Takeaways
- A credit inquiry happens when your credit report is checked.
- Hard inquiries usually happen when you apply for a loan or credit card, and they may temporarily affect your credit score.
- Soft inquiries happen when you check your own score, view eligibility, or receive pre-approved offers, and they do not affect your credit score.
- Too many hard inquiries in a short time can make lenders feel you are applying for credit too often.
- Incorrect or unauthorized hard inquiries can be disputed with the credit bureau.
A hard credit inquiry usually happens when you formally apply for a loan or credit card, and it may temporarily affect your credit score. A soft credit inquiry usually happens when you check your own credit score, view eligibility, or receive a pre-approved offer, and it does not affect your score.
For example, checking your CIBIL score before applying for a personal loan is usually a soft inquiry. But submitting a full personal loan application to a lender can create a hard inquiry because the lender checks your credit report to make a lending decision.
Understanding the difference between hard and soft credit inquiries helps you apply for credit more carefully, avoid too many loan applications, and protect your credit score from unnecessary dips.
What Is a Credit Inquiry?
A credit inquiry means your credit report information was checked. A credit inquiry can be made when you check your own credit score. Or when you apply for a credit or a loan, the lender checks your credit report, to gauge how much credit they can approve for you.
When you apply for a personal loan, the lender checks your credit report to understand your repayment history, existing debts (if any) and current credit behavior. This check is called a credit inquiry.
Hard vs Soft Credit Inquiry: Quick Difference
Understanding soft inquiry vs hard inquiry can help you know which credit checks affect your score and their impact.
| Factor | Hard Credit Inquiry | Soft Credit Inquiry |
|---|---|---|
| Definition | Credit check done for a formal loan or credit application | Credit check done for eligibility, self-check, or pre-approved offers |
| Score impact | May temporarily lower your credit score | Does not affect your credit score |
| Common example | Applying for a personal loan or credit card | Checking your own CIBIL score |
| Why it matters to lenders | Too many hard inquiries in a short time can make lenders feel you are applying for credit too often. | Soft inquiries are not treated as new credit applications, so they usually do not affect lending decisions. |
| Best way to manage | Apply only when you are serious and have shortlisted a few lenders | Safe to use for checking eligibility or monitoring credit |
Commonly, these are also referred to as soft pull vs hard pull credit checks. A soft pull usually does not affect your score, while a hard pull may temporarily lower it.
What Is a Hard Credit Inquiry?
A hard credit inquiry happens when a lender checks your credit report because you have formally applied for credit. This may include a personal loan, credit card, home loan or car loan.
A hard credit inquiry impacts your credit score and can lead to a drop in your score. Suppose you apply for personal loans on four different apps in the same week. Each formal application may lead to a hard inquiry. This can make your profile look like you are credit-dependent.
What Is a Soft Credit Inquiry?
A soft credit inquiry happens when your credit report is checked for pre-approved credit offers, not for final loan approval. It does not affect your credit score. It is also considered a soft inquiry when you check your own credit report.
Say, you check your own credit score before applying for a loan; it is usually a soft inquiry. This is a good financial habit because it helps you understand your credit health and keep track of your credit history.
What Triggers a Hard Credit Inquiry vs Soft Credit Inquiry?
The trigger depends on the purpose of the credit check. A hard credit check usually happens when you apply for new credit, while a soft credit check happens during basic checks like score monitoring, eligibility checks, or pre-approved offers. Here are common situations that trigger a credit inquiry.
| Situation | Type of Inquiry | Reason for Inquiry |
|---|---|---|
| Applying for a personal loan | Hard inquiry | The lender checks your credit report for approval |
| Applying for a credit card | Hard inquiry | The bank reviews your creditworthiness |
| Requesting a credit limit increase | May be hard | Some lenders do a full credit check |
| Checking your own credit score | Soft inquiry | It is only for your own information |
| Checking loan eligibility | Usually soft | It helps estimate eligibility before application |
| Receiving a pre-approved offer | Usually soft | The lender may pre-screen your profile |
| Final acceptance of a pre-approved loan | May become hard | The lender may run final approval checks |
| Existing lender reviewing your account | Soft inquiry | It is usually for internal review or offers |
Does a Hard Credit Inquiry Affect Your Credit Score?
A hard inquiry usually happens when you apply for any type of loan or apply for a credit card. It can cause a small temporary dip in your credit score. One hard inquiry usually takes a few points off your score [1]and may not be a major cause of concern. It is when multiple inquiries happen within a short period of time that they can have a larger impact on your score. That indicates to the lenders that you are in desperate need of money or unable to manage finances responsibly.
Applying for one personal loan after comparing options is normal. But applying to five lenders in two days can create multiple hard inquiries and may reduce your approval chances. And have a bigger impact on your credit score
Does a Soft Credit Inquiry Affect Your Credit Score?
No. A soft pull does not affect your credit score. Soft credit inquiry includes checking your own score, checking basic loan eligibility, or receiving pre-approved offers.
In fact, it is a good habit to check your own credit score before a loan application. You can see your credit score and check your loan eligibility before you apply for it.
How Long Do Hard and Soft Credit Inquiries Stay on Your Credit Report?
Hard credit inquiries usually stay on your credit report for up to 2 years. The impact is usually temporary and may reduce over time, especially if you continue paying EMIs and credit card bills on time.
Soft credit inquiries work differently. These usually happen when you check your own credit score, check loan eligibility, or receive a pre-approved offer. Soft inquiries do not affect your credit score and are usually visible only to you for reference.
So, if you are only checking your credit score or eligibility, you do not need to worry. But if you are formally applying for multiple loans or credit cards, it is better to space out your applications and apply only when you are serious.
Can You Remove a Hard Credit Inquiry?
You cannot remove a genuine hard inquiry if you actually applied for the loan or credit card. But if you see an inquiry you do not recognize, whether it is unauthorized or an error; you can raise a dispute with the credit bureau.
Let’s assume you applied for a personal loan last month. That inquiry is valid and usually cannot be deleted. But if you see a credit card inquiry from a bank you never contacted, you should dispute it.
How to Avoid Too Many Hard Credit Inquiries
Before you apply for any loan or new credit, follow these guidelines, to avoid chances of too many hard credit inquiries:
Check your credit score first
Before applying for a loan or credit card, check your credit score. This gives you an idea of where you stand and whether you are likely to qualify.
Check eligibility before applying
Use eligibility checks wherever available. These are usually soft inquiries and do not affect your credit score. Or a better way is to check the eligibility criteria of the lender that you intend to apply to.
Do not apply with many lenders at once
Every formal loan or credit card application can lead to a hard inquiry. Too many applications within a short time may make you look credit-hungry.
Compare first, apply later
Check interest rates, fees, eligibility, and repayment terms before applying. Once you find a suitable option, apply only with that lender.
Avoid applying just to test approval chances
Do not submit applications only to see if you get approved. If your credit score, income, or repayment history is weak, improve your profile first.
Maintain a healthy repayment record
Pay EMIs and credit card bills on time. A good repayment history can improve your credit profile and reduce the need for repeated applications.
Hard vs Soft Inquiry During Loan Eligibility and Application
When you check your eligibility on the Zype app, it helps you understand whether you may qualify for a loan before moving ahead with a formal application.
Here is how it usually works:
- Eligibility check on theZypeApp: This is the first step where you enter basic details to check whether you may be eligible for a loan offer.
- Loanoffer: Based on your details, you may be shown a possible loan offer. At this stage, you can review the loan amount, EMI, tenure, interest rate, processing fee, and repayment terms.
- Formal loan application:If you choose to go ahead with the loan application, the lending partner may run a hard inquiry as part of the final credit checks. This hard inquiry may appear on your credit report and can have a temporary impact on your credit score.
- Final approval:Checking eligibility does not guarantee loan approval. Final approval depends on the lender’s credit checks, internal policy, document verification, and repayment assessment.
That is why it is better to check your eligibility first and check whether you fulfil the criteria. If you do, go ahead with the loan application, review the possible offer carefully, and apply only when you are comfortable with the EMI, tenure, fees, and repayment terms.
Source:
[1] https://www.experian.com/blogs/ask-experian/do-multiple-loan-inquiries-affect-your-credit-score/
FAQs
What is the difference between a soft vs hard inquiry?
A hard inquiry usually happens when you apply for a loan or credit card, and the lender checks your credit report. A soft inquiry happens when you check your own score or when eligibility is checked without a full application, and it does not affect your score.
Does checking my own credit score lower my score?
No, checking your own credit score does not lower your score. It is treated as a soft inquiry and is a good habit before applying for a loan.
How many hard inquiries are too many?
There is no fixed number, but multiple hard inquiries within a short time can make you look credit-hungry to lenders. It is better to compare options first and apply only where you are serious.
How long do hard inquiries stay on my credit report?
Hard inquiries usually stay on your credit report for up to 2 years. Their impact on your score generally reduces over time.
Can soft inquiries be seen by lenders?
Soft inquiries usually do not appear as loan applications to lenders and do not affect your credit score. They may be visible in some consumer report sections, depending on the credit bureau.
Can I remove a hard inquiry from my credit report?
You cannot remove a genuine hard inquiry if you actually applied for the loan or credit card. If the inquiry is incorrect or unauthorized, you can raise a dispute with the credit bureau.
Does every loan application create a hard inquiry?
A full loan application usually creates a hard inquiry because the lender checks your credit report for approval. However, basic eligibility checks or pre-checks may be soft inquiries, depending on the lender.
Can multiple loan applications affect my credit score?
Yes, multiple loan applications in a short time can lead to hard inquiries and may temporarily lower your score. It can also make you look over-reliant on credit to lenders.
Is pre-approved loan eligibility a hard or soft inquiry?
Pre-approved eligibility checks are often soft inquiries and may not affect your score. But if you accept the offer and submit a full application, the lender may do a hard inquiry.
Does Zype perform a hard or soft credit inquiry during loan application?
During a loan application, a hard inquiry may be created because the lender checks your credit profile for final processing. Eligibility or offer checks may be different, so users should review the consent screen and loan terms in the app.
