When searching your credit score and credit history, there are two types of searches; hard credit inquiries which will come up on your credit report and may impact your credit score, and soft credit inquiries which will not leave a mark on your credit report or affect your credit score.
Soft credit searches are when you check your own score, when a potential employer or non-lender does a background check, or if you are just searching for the best rates and offers but not officially applying for any loans or credit cards. Generally, soft searches are not visible to lenders or creditors in conjunction with an application for credit, and you don’t have to worry about how many you are making.
Hard credit searches on the other hand, occur when a financial institution, official lender or creditor like credit card companies or banks check your credit to determine whether you are a good credit candidate. They can act as a timeline of when you applied for new credit and can stay on your credit report for around 2 years, although will likely have little impact on your credit score past 1 year.
The odd hard credit search over a long period of time will not likely effect your credit score drastically but be wary of having too many hard credit inquiries over a short period of time. On one hand, recent hard inquires tell a lender that you are currently looking for new credit but many recent hard searches may indicate that you have been unsuccessful in obtaining credit repeatedly in that time and therefore seem like a bad candidate.
The exception to this, is if you are looking for very specific loans such as new auto loans, mortgage loans, or utility providers, and are comparing loan terms to decide on the best one for you. In these scenarios, multiple inquires over a given period of time (usually 14-45 days depending on the credit scoring model) are usually counted as one inquiry in that although all of them will show on your credit report, only one of the inquiries within that period of time will count towards your credit score.
At Lendwise, we conduct an initial soft credit search when we receive a loan application in order to determine whether to make provisional loan offer or not. A hard credit search is only conducted after a student accepts the loan offer and proceeds to a formal loan agreement.
Has our credit score series has made you curious to know more about your credit score?
You can access a detailed copy of your own credit report through CheckMyFile.*
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