If you recently downloaded your credit report and it showed a “hard inquiry”, it means that you must have applied for some type of credit (such as a credit card or loan) in the last two years. A hard inquiry can damage your credit score, and it may stay on your credit report longer than expected.
Let us understand what hard inquiry is and how it affects your credit report and credit score.
What is a hard inquiry?
When you apply for any type of loan or credit card, you allow the bank or financial institution to check your credit report. This is done to determine whether you are creditworthy or not, and it is called ‘hard inquiry’ or ‘hard pull’ or ‘hard credit check’.
Potential lenders look at your credit report to understand whether you will be able to repay the borrowed money on time. If you have a good credit history, banks or financial institutions are less likely to hesitate in giving you a new loan or credit card.
When a bank or financial institution pulls your credit report from the four major credit bureaus (Experian, Equifax, TransUnion CIBIL, or CRIF Highmark), it is called a hard inquiry.
Also read: CIBIL Score Vs Credit Score: There is a difference – Explained
Every time a hard inquiry appears on your credit report, your credit score may drop by a few points, regardless of whether your loan or credit card application is approved or not. On the other hand, if you check your credit report yourself or apply for pre-qualification for a credit card, it is considered a soft inquiry and does not affect your credit score.
When does a hard inquiry appear on your credit report?
If a hard inquiry is listed on your credit report, it could be that you:
-Applied for a new credit card in the last two years.
-Taken out a new personal loan, home loan, car loan, education loan, or mortgage loan.
-Applied for a balance transfer card or loan.
-Applied for a business credit card.
-Applied for an increase in the credit limit of your existing credit card.
How does a hard inquiry affect your credit score?
Although a hard inquiry remains on your credit report for two years,
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