What is a Credit Inquiry?

A credit inquiry is an item that gets listed on a consumer’s credit report for the purpose of furnishing a lending agreement or an extension of credit. An “inquiry” indicates that someone with “permissible purpose” requested a copy of the consumer’s credit report for that exact purpose and muss asses their creditor history in order to make reasonable judgement and do so. This term is often synonymous with credit check and credit pull as well. Although there are varying degrees of credit pulls, credit checks and credit inquiries they all typically mean the same thing.

Is There a Limit to How Many Credit Inquiries You Can Do?

No, there is technically no limit to how many credit inquiries you can do however doing too many is sure to have a negative impact to your credit worthiness and could potentially prevent you from qualifying for some of the extensions of credit you are looking to acquire. Each inquiry you pull will inevitably become a ding on your credit report, even if they are soft credit checks. You should ideally look to limit your credit checks if you care about your credit score since, having too many inquiries will make it seem like you are credit seeking.

Soft Credit Checks

A soft credit check is a credit inquiry that does not count as a hard credit check in which a report is pulled from all three credit bureaus. Soft checks are typically performed only using one credit bureau and are less intensive in terms of credit evaluation. In order to help qualify for many newer lending products, a soft credit check will suffice. Although soft pulls are less intensive than hard pulls you should still ideally limit yourself to 2 soft credit pulls per year in order to minimize impact to your credit score.

Hard Credit Checks

A hard credit check is a credit inquiry in which the lender is taking all three reports from each credit bureau and getting an average score to determine a given consumer’s eligibility for an extension of credit. These hard checks are typically used when qualifying for a mortgage. They will definitely have a negative impact to your credit worthiness and are something you want to keep to a minimum if possible and try to limit to “1”. Hard credit checks last for 60 days so make use of that time to see if you are getting the best possible interest rate.

Different Credit Report Versions

Credit reports and credit inquiries are quite a nuanced thing. Although most lenders use a FICO scoring system to determine a given consumer’s eligibility, there are many different versions of the FICO scoring system. Newer versions like FICO 9.0 and FICO 10.0 have more lax scoring systems and don’t negative impact consumers for medical debts while older version like FICO 2.0 are not as lax. Many hard credit pulls are still done using FICO 2.0, so the industry is lagging behind in this regard and there is not congruency between lenders. However, the breakdown of the score remains the same in many respects as it’s still focused on payment history, utilization, new credit, length of credit history and credit mix.