Credit inquiries…
What is a credit inquiry on a credit report?
A credit inquiry is what it’s called whenever a business requests information about your credit from a credit reporting bureau. This is an inquiry. There is a record created when they check your credit.
What Are Some Examples of Who Might Do an Inquiry on a Credit Report?
Examples of credit inquiries include:
department stores when you apply for credit cards, and
banks when you apply for loans, and potential landlords.
These people or organizations do an inquiry on a credit report in order to see if they think you are worthy of whatever they are offering, such as a credit card, loan, or renting an apartment.
When a credit inquiry is done on you, the inquiry can be one of two types, either a hard inquiry or a soft inquiry.
An example of a hard inquiry happens when you apply for a credit card. The credit card company submits your social security number to the credit reporting agency. In return, the credit card company gets your full credit report. This report will include your credit history, including your credit score.
Most Other Types of Credit Inquiries
Most other types of credit inquiries are examples of soft credit inquiries. Have you ever received a credit card offer in the mail that says that you are pre-approved? The credit card company knew that you qualified for the pre-approval because they did a soft inquiry. The soft inquiry will just allow the credit card company to identify who are potential credit card customers. These soft inquiries are not caused by anything that you do, like an application.
What Is the Difference Between a Hard Inquiry and a Soft Inquiry?
Hard inquiries are generally triggered when you apply for something. Hard inquiries appear on your report and others will be able to see these inquiries. Most hard inquiries can stay on your report for up to two years. These inquiries may have an effect on your credit. This allows potential creditors to see if you are trying to get more credit than you can afford. So, when you apply for a lot of credit in a short period of time, those multiple hard inquiries can look bad on your credit report.
On the other hand, soft inquiries are not seen by creditors. Soft inquiries will not have an impact on your credit score.
Will Checking My Credit Affect My Credit Score?
Checking your own credit has no effect on your score.
This creates soft credit inquiries. This is something that is often something that confuses people. However, you are safe checking your credit, and it will not harm your credit score. In fact, you should check your credit regularly, so that you can correct any mistakes that may be on your credit report. Also, you can make sure that no one is illegally checking your credit. By keeping track of your credit history, you can see if there is any identity theft. You will be able to notify credit bureaus in the case that you see any fraudulent activity on your report.
I want you to have financial improvement.
So, remember this
Key Takeaway
An example of a hard inquiry, which can affect your credit, is when a credit card company checks your credit. An example of a soft credit inquiry, which does not affect your credit, is when you check your own credit.
Do you want to know more about what I say about credit scores? Check out some of my other bits of financial literacy.
Want To Learn More?
Uh-Oh! Did You Forget Everything You Learned in Your Financial Literacy Class?
What Credit Score Is Needed to Rent an Apartment? Rich Mom Answers
Don’t forget to subscribe to Rich Mom, Poor Kid.
My name is Valerie, aka “Rich Mom.” Rich Mom Answers is a segment of the Rich Mom, Poor Kid blog that gives short answers to my daughter’s personal finance questions. The goal of Rich Mom Answers is to teach her the vocabulary of financial literacy and to answer as many of the common questions that come up when thinking about personal finances. I started sharing these bits of financial information in order to encourage my daughter (aka Poor Kid), because I want her to get better with her finances and know how to create her own wealth.
What Does Wealth Do?
Wealth gives us choices and freedom. Wealth allows us to be generous and help others. I want her to know how to kick a**, build wealth, and use her time having a beautiful free and generous life. I decided that I wanted to share them with her friends, and you. The intended audience is people age 30 and under or financial literacy beginners. My goal is to encourage others to take control of their own finances so that they can make better decisions and have financial improvement.
The information shared here is not intended as financial advice, just entertainment and encouragement.
I want you to be:
Young, Building Health & Wealth
I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also remember that past performance is not a guarantee of future performance.