Good morning!
At least once a year, you should get a copy of your credit report to make sure all the information on there is accurate.
One category of items you want to check is called inquiries.
A credit inquiry is when an outside party – like a prospective employer, credit card company, or some other entity – runs your credit.
It’s important to know the difference between hard and soft credit inquiries, so as to not do anything that will damage your credit score.
Soft inquiries are pulled for the purposes of gathering information, and not to qualify for a loan. If you apply for a job, for instance, and they pull your credit, that is considered a soft inquiry. Soft inquiries will not affect your score.
I use Credit Karma, which updates me on my score monthly. That’s also a soft inquiry.
A hard inquiry occurs anytime your credit is pulled for the purpose of borrowing money. This includes applying for credit cards, auto loans, mortgages, and credit checks done by a prospective bank lender.
Each hard inquiry can lower your score by five points. However, the credit bureaus assume that you are going to shop around for the best deal when looking for credit, so they allow you to pull your credit multiple times over a 30-day window and will only count those inquiries as one.
You should keep hard credit inquiries to no more than a few every three years. Think about it: three inquiries in a year could cause your score to drop 15 points. That can make a huge difference in your credit rating.
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