Inquiring about your credit report with the leading credit rating agencies in the country seems to be the most obvious answer to the most pertinent worry in your head ‘is 710 a good credit score?’ But have you ever wondered what the implications are of inquiring about your credit report with the credit rating agencies?
As you must know, credit inquiries account for nearly 10% of your credit score and thus it is a significant portion that you need to take care of in order to have the perfect credit score for your next loan application. Keeping this in mind, here are 2 things that you must know regarding credit report inquiries:
1.The Types Of Credit Inquiries
The credit rating agencies classify the credit report inquiries in two major types.
a. Hard Inquiries
The hard inquiries of your credit report are the ones that are placed by prospective lending companies like car loan providers, credit card providers, mortgage owners, etc. These credit inquiries are made against your name with the credit reporting agencies once you apply for a loan from one of the credit providers in the market. This is also the only type of inquiry that counts towards your credit score.
This means that every time there is a hard inquiry against your credit report, your credit score will take a slight negative impact. In order to make the whole process convenient, the credit reporting agencies don’t count multiple hard inquires towards the negative implication if they are placed within a period of 14 days. This is why you are heavily recommended you complete your loan application process with the big ticket lenders in one go in order to avoid multiple inquiries.
b. Soft Inquiries
The soft inquires of credit report are those inquiries that you or your employer or your business partners make against your name in order to gain an understanding of your credit position and payment history. These types of inquiries don’t have an adverse effect on your credit score and can be made only when you have authorized the concerned body to have access to your credit report.
In this case what you must remember that though multiple soft inquiries don’t have an adverse effect on your credit score, it will require you to pay a lump sum amount of money beyond the first credit report that you obtain from your credit reporting agency. The FICO guarantees you one free credit report per year for each credit reporting agency and beyond that you will need to pay the declared amount.
2. Effect Of Inquiries On Your Credit Score
As you just read, hard inquiries negatively affect your credit score and are considered against you. This is because of the fact that with multiple inquiries you come across as a risky borrower to the credit reporting agency as they classify you as someone who is desperate for loan or is in some type of financial trouble and is turning towards credit to pull himself out. This is why it is recommended that you keep the hard inquiries on your credit report at the basic minimum.
With these 2 aspects of credit report inquiries clear in your head, the time is right to go ahead and start shopping around for the next big loan that you had planned!