I came across a term CREDIT INQUIRY while searching about student credit card. What is it and how will it impact my credit score/ credit profile? What are it’s different types?
A credit inquiry refers to a request to look at your credit file from a credit bureau. Credit Enquiry is typically requested by financial institution to look at your credit score and whether to approve your loan request or whether to issue a credit card. Credit inquiries can be made for many other reason as well, such as if you want to check your own credit.
There are two types of credit inquiry-
1.) Soft Credit Inquiry- These are reviews of your credit file, including reviews of existing accounts by lenders, prescreening inquiries by prospective lenders, and your requests for your annual credit report. These will not change your credit score.
2.) Hard Credit Inquiry- These are typically inquiries by lenders after you apply for credit. These inquiries will impact your credit score because most credit scoring models look at how recently and how frequently you apply for credit.