In the world of electronics, data is available to everyone. Your personal information, where you live, and your occupation may be known to people you don’t even know. And people are inquiring about you more than you think. This is true when it comes to your credit history. People are asking about your credit accounts and how you have managed them, and they can find this information online.
Every time a company requests information about your credit file, an inquiry is noted on your credit report. A hard inquiry occurs when you or a lending company asks about a new line of credit. Therefore, the other type is called a soft inquiry.
Your current creditor can check your credit history periodically in order to perform a background check. This is a type of soft inquiry and, while it often happens without your knowledge, it does not affect your credit score. You will also find out who has made an inquiry when you get your next credit report, so don’t worry. Nobody’s trying to steal anything when they make a soft inquiry. They just want to make sure you’re keeping up with your payments.
Another type of soft inquiry occurs when a lender tries to market you for promotional offers. If you receive an offer for a new credit card in the mail (and believe me, you will), there has most likely been a soft inquiry made into your credit history. If you have been prescreened for a possible loan, a soft inquiry has also been made in this situation.
If you are applying for a new credit card or loan, you are actually performing a hard inquiry. While a company offering you a new credit through the mail has made a soft inquiry—meaning your credit information has been bought by a new lender so he/she can offer you a new credit card— you will be making a hard inquiry if you fill out the application to establish a line of credit with the new credit card. Too many hard inquiries in a short period of time, and you could damage your credit score. (Approximately 10% of your credit score actually involves these new hard credit inquiries.)
The last type of soft inquiry is the type you actually make. Simply asking for your credit report is a soft inquiry. Remember you get one free report a year.
The reason soft inquiries do not affect your credit score is because, while you can see on your credit report who is making an inquiry, the lenders making the soft inquiries do not see this information. (In other words, they don’t see the other lenders making soft inquiries, only their own.) Just remember to utilize your own soft inquiry by getting a free annual copy of your credit report. The number of people who have your information may astonish you.
He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.
Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.
In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
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