What Are Soft And Hard Credit Inquiries?

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.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

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Is The Golden Age Of Investing Really Over?

Charlie Munger was interviewed by Becky Quick on CNBC this morning.  If you don’t know who Charlie Munger is, he is Warren Buffett’s right hand man and one of the most respected businessmen in this country.

Becky Quick asked Mr. Munger what he thought of the stock market, and his response was sobering.

He said that the golden age of investing is behind us, because it’s much more difficult now to pick individual stocks.  He said the valuations are just too high, and finding value would be extremely difficult.

I have a tremendous amount of respect for Charlie Munger as an investor.  His track record is stupendous.  I don’t know, though, if he’s right about the golden age of investing being behind us.

I will acknowledge that the 60s, 70s, 80s, and 90s were incredible times to be in the stock market.  Companies like Walmart (NYSE: WMT) have turned $1600 into $16,000,000 over a 30 year period.

However, we are entering a completely different world.  A world where market opportunities are in the trillions, not billions.  Never in the history of mankind have we had so many technological innovation platforms emerging at the same time:

Bill Gates said that a breakthrough in artificial superintelligence would be worth ten Microsofts.  ARK Investment’s Catherine Wood and her analysts believe a breakthrough could be worth 35 Amazons.

For all we know, the golden age of investing could very well be ahead of us.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)