Hard or Soft
Posted on August 17, 2008
One of the factors that helps to determine your FICO score is the inquiries. Meaning your applications for credit. The reasoning is based on the fact applying for several different account in a short period of time represents risk. Lenders begin to ask why does a consumer need all this credit. Measured is what is called hard inquiries. This is the requests for credit by yourself. Meaning when you apply for that credit card offer you just got in the mail. If there is a pre-approved offer that comes in the mail, that is known as a soft inquiry. Since you didn’t ask for credit and the creditor just accessed your credit report to give you a loan, it doesn’t count against you.
One important note is shopping around is allowed on certain loans. FICO scores take into account that responsible consumers shop around when making large purchase decisions. So if you are trying to get a mortgage you get quotes from several different lenders without it hurting your score. This is true for auto loans as well. Now this doesn’t mean you can apply for mortgages and auto loan and not have to worry about applying for multiple counting against your FICO score. You have a period time that you are allowed to shop around. 30 days is often the accept period of time. If you apply for 4 mortgages within this period of time it will actually count as just one inquiry.
You did need to know where you are at with inquires. It is a small part of your score but before you apply for any credit you should know the time it has been since last applying for credit. Review this info on your credit report.
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