What Are Inquiries On Your Credit Report?

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Experian, TransUnion and Equifax now offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com.

Inquiries are entries that appear on your credit report when your credit information is accessed by a legally authorized person or organization (including yourself). Most commonly, inquiries are the result of an application for credit, goods or services; an account review made by a company that you already do business with; or a preapproved offer of credit that has been sent to you.

There are two types of credit inquiries: hard inquiries and soft inquiries. Account reviews and preapproved offers fall under the category of soft inquiries, which have no effect on your credit scores. Hard inquiries include applications for credit or certain services, and although their impact is minimal, they can temporarily affect your scores. It is good practice to get your credit report checked throughout the year to view hard and soft inquiries. Here's what you need to know about inquiries on your credit report and the differences between hard and soft inquiries.

How Do Credit Inquiries Work?

When deciding whether to extend you credit—and if so, how much and at what interest rate—lenders typically obtain your credit report from one or more of the three national consumer credit bureaus (Experian, TransUnion and Equifax). Your credit report offers a summary of your debts and payment history on those debts.

As part of their evaluation process, creditors often also obtain one or more credit scores: three-digit numbers derived from statistical analysis of your credit report's contents. A higher score indicates lower likelihood you'll fail to repay your debts. When you apply for credit or services such as a cellphone account, your application usually indicates that you are giving the lender permission to do a credit check. When lenders run those credit checks, hard inquiries appear on your credit report.

Certain companies are also legally allowed to access your credit information for reasons other than an application you made, such as when your current lenders periodically check your reports or when a potential lender sends you a preapproved offer.

Employers may also check your credit history with your written permission, although they will not receive a credit score. In addition, you may check your own credit reports and credit scores, and it's wise to do so regularly—these checks have no effect on your credit rating. Credit checks such as these, which are not related to credit applications, generate soft inquiries on your credit report.

What Is a Hard Inquiry?

A hard inquiry appears on your credit report when a lender checks your credit in response to an application for a new loan, credit card or line of credit.

Whenever you seek new credit, there's the potential for a new debt, which may temporarily lower scores slightly until you can show that you are managing that new debt responsibly. Credit scoring models such as those from FICO® and VantageScore® sometimes account for that increase in risk by lowering your scores slightly; FICO® says hard inquiries typically dock scores by less than five points.

Hard inquiries remain on your credit report for up to two years, but as long as you keep up with your debt payments, credit scores often rebound from an inquiry within a few months. And, most credit scoring models no longer count a hard inquiry in score calculations at all after 12 months.

What Is a Soft Inquiry?

Soft inquiries appear on your credit report when someone runs a credit check for reasons unrelated to lending you money. These events are not associated with greater repayment risk, so they have no effect on your credit scores. Here are a few examples:

  • Utility companies may use credit checks to decide if they require security deposits on leased equipment such as Wi-Fi routers or satellite dishes.
  • Auto insurers may use credit checks to help set premiums, since safe driving habits and high credit scores show strong correlation.
  • Credit card issuers with whom you already have accounts may check your credit scores for purposes of marketing new cards or other products to you.

If you obtain your own credit report or check your credit score using a credit monitoring service such as Experian's, that will generate a soft inquiry on your credit report. But, as with other soft inquiries, monitoring your own credit scores cannot hurt your credit scores.

How to Manage Hard Inquiries

Because hard inquiries can reduce your credit score, it's wise to refrain from seeking multiple new loans or credit cards in rapid succession. Applying for multiple credit cards in quick sequence or at the same time can ding your credit score unnecessarily, for instance.

Because hard inquiries can temporarily reduce your credit score, it's wise to only apply for credit when you really need it. Although some credit scoring models count multiple inquiries for the same purpose made within a short period of time as one, several different types of inquiries made within a short period of time can ding your credit score or cause lenders to worry that you are experiencing financial distress.

It's also a good idea to avoid loan or credit applications for six months to a year before you apply for a mortgage or car loan, so your application reflects your best possible credit score.

Once you're ready to seek a loan, however, it's OK to submit applications to multiple lenders to shop for the best combination of interest rates and fees. You don't have to worry that doing so will mean a cumulative hit on your credit scores: The FICO® Score and VantageScore models are designed to allow for rate shopping on loans, so they treat multiple inquiries related to loans of similar type as one, as long as they occur within a short time of one another. To play it safe, keep your rate shopping within a two-week period.

How to Remove Hard Inquiries

You should check your credit reports from all three credit bureaus regularly—at least once each year—which you can do for free at AnnualCreditReport.com. You can also check your Experian credit report for free anytime. One thing to look for is any hard inquiry you don't recognize. Unexplained hard inquiries, while rare, can lower your credit scores—but more importantly, they can be signs of criminal activity.

If you see a hard inquiry you don't recognize, reach out to the creditor in question, using the contact information included in your credit report. Suspicious inquiries aren't always connected to illegitimate activity: An unfamiliar creditor may turn out to be the lending partner of a retailer where you applied for a credit card or a dealership where you applied for an auto loan, for instance.

If you confirm a hard inquiry is connected to fraudulent activity such as someone applying for credit with your information, take these steps:

The Bottom Line

In many ways, inquiries represent the reason the credit reporting system exists: Credit checks allow lenders (and you) to monitor your ability to manage debt, and gauge your capacity for taking on new loans and credit. If you're mindful of inquiries' potential credit impacts, and you carefully manage when and how often you rack up new inquiries, you can help lenders see you in the best possible light when you apply for new credit.