Understanding Soft Inquiries and Their Impact on Your Credit

When it comes to managing your credit, understanding the nuances of credit inquiries is crucial. At O1ne Mortgage, we believe in empowering our clients with the knowledge they need to make informed financial decisions. In this blog, we’ll delve into the world of soft inquiries, how they work, and their impact on your credit score. If you have any questions or need mortgage services, don’t hesitate to call us at 213-732-3074.

What is a Soft Inquiry?

A soft inquiry, also known as a soft credit check or soft credit pull, occurs when you or someone you authorize checks your credit report. This can happen for various reasons, such as when a potential employer reviews your credit history or when a company like a credit card issuer or mortgage lender preapproves you for an offer. Unlike hard inquiries, soft inquiries do not affect your credit scores because they are not linked to a specific application for credit.

How Does a Soft Inquiry Work?

When you apply for new credit, such as a loan or credit card, the issuer will typically request a hard inquiry to check your credit. Hard inquiries remain on your credit report for two years, but their impact on your credit scores is usually minimal and lasts only a few months.

In contrast, a soft inquiry occurs when someone checks your credit report without you submitting a new application for credit. Soft inquiries are not indicators of greater risk and, therefore, do not impact your credit scores. Examples of soft inquiries include:

• Checking your own credit
• One of your current creditors checking your credit
• Applying for a soft-pull preapproval with a creditor
• A company checking your credit to see if you qualify for preapproval offers

Some applications, such as opening a bank account or renting an apartment, can result in either a hard or soft inquiry. In these situations, you can ask the company whether it will use a hard or soft pull to check your credit.

Can You See Soft Inquiries on Your Credit Report?

Yes, you can view the soft inquiries on your credit reports. To get copies of your credit report, you can request one free copy from each major credit bureau (Experian, Equifax, and TransUnion) weekly through AnnualCreditReport.com. Additionally, you can check your Experian credit report for free.

It’s important to note that your three credit reports may have different inquiries, as an inquiry is only added to the credit report that was checked. For example, if you check your Experian credit report, the soft inquiry won’t be added to your Equifax or TransUnion credit reports.

How Do Soft Inquiries Impact Credit Scores?

Credit scoring models generate your credit score by analyzing the information in your credit report. Soft inquiries do not have any impact on your credit scores. Hard inquiries, on the other hand, may remain in your credit reports for about two years and can impact your credit scores. However, the impact is typically small, and credit scores tend to rebound within a few months if no new negative information is added to your credit report. Scoring models usually only consider hard inquiries from the previous 12 months when calculating your scores.

Multiple recent hard inquiries can do more damage to your credit scores. However, credit scoring models often combine multiple hard inquiries from a 14- to 45-day period—depending on the type of credit score—to avoid penalizing consumers who are rate shopping for installment loans such as mortgages and auto loans.

Should You Worry About Inquiries?

In general, hard inquiries play a minor role in your credit score, and the fear of a hard inquiry should not deter you from applying for credit when you need to open a new account. Soft inquiries are even less concerning because you could have dozens or even hundreds of soft inquiries in your credit reports, and they still won’t impact your credit scores.

At O1ne Mortgage, we understand that navigating the world of credit can be complex. That’s why we’re here to help you every step of the way. Whether you’re looking to buy a new home, refinance your current mortgage, or simply have questions about your credit, our team of experts is ready to assist you. Call us today at 213-732-3074 for all your mortgage service needs.

Remember, understanding how credit inquiries work is just one piece of the puzzle. By staying informed and making smart financial decisions, you can maintain a healthy credit score and achieve your financial goals. Trust O1ne Mortgage to be your partner in this journey.