A hard inquiry is when an institution requests an individual’s credit report to evaluate their creditworthiness, which is recorded on the credit report. Excessive hard inquiries can negatively impact credit scores. Existing creditors may also generate hard inquiries, but they don’t necessarily indicate concern. It’s important to review credit reports annually and investigate unfamiliar inquiries to prevent fraud or identity theft.
A hard inquiry is an event in which a copy of an individual’s credit report is requested. That request can come from people like the owners, or from a financial institution with which the person currently does business or is trying to establish a relationship by opening some type of account. The exhaustive investigation is the result of a credit check carried out by the institution as part of the process of evaluating the creditworthiness of the individual. Each time a credit reporting agency receives such an inquiry, the request is recorded as an item on the credit report, giving the person an idea of how often this type of inquiry is recorded. request and by what type of agencies or institutions.
The hard query is classified differently than what is known as a soft query. The latter is essentially the individual requesting a copy of the credit report for their own review, rather than an institution evaluating the creditworthiness of the subject. In some cases, inquiries from an employer or law enforcement agency will also be considered soft inquiries rather than hard. This is important to keep in mind, as excessive numbers of hard inquiries logged in a short period of time can have a detrimental effect on your credit score. For this reason, people should refrain from applying for multiple credit cards or loans in a single month or quarter.
Along with potential creditors accessing credit reports to determine if the person can be approved for a new account or loan, existing creditors can also generate a tough inquiry from time to time. Credit card companies generally do this once or twice a year if the person is being considered for a credit line increase. Insurance companies may also launch a thorough investigation from time to time, and even landlords may choose to do so to make sure the tenant stays current with their obligations and is less likely to start losing rent payments. .
It is important to note that a thorough investigation found on a credit report does not automatically mean that the creditor is concerned. Often the process is routine and can result in a favorable outcome for the individual, such as an increase in credit line. At the same time, people should take the time to review their credit reports at least annually and pay close attention to who has requested copies of the reports. Inquiries from entities with which the individual is unfamiliar may indicate a need to investigate those inquiries further, to ensure that they are legitimate and not related to any attempted fraud or identity theft.
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