Credit Inquiry and it's impact on your credit score

Saturday May 15th, 2021



Hot take here, hot take there; that’s social media every day. Every opinion counts, every voice can be heard. In the mix, is a measure of falsehood that when amplified well enough has the semblance of valid or well-researched content for those in search of information. In most cases, however, a little effort at verifying what we see online will reveal the facts.


In this piece, I would like to show you methods that can be used to know your credit score and it's impact or otherwise on you.


Money is generally known as a medium of exchange. In credit-based societies like Canada, one’s ability to own things is not directly measured by how much cash one has residing in one’s account. Rather, what is considered important is one’s financial ethics.



There are two main ways to check your credit history.

1. Soft Inquiry
2. Hard Inquiry

Soft Inquiry

A soft inquiry on your credit history allows financial institutions and creditors have an idea of how you are managing your debt and credit history effectively. Also, whenever you check your credit history, it is considered a soft check or a soft pull. 


According to the popular investment site, Investopedia, A soft pull happens in the following circumstances:

1. You give a potential employer permission to check your credit.
2. Financial institutions that you already do business with check your credit.
3. Credit card companies that want to send you preapproval offers check your credit.
4. You apply for a preapproval for a loan or mortgage.


Now, contrary to popular opinion out there, a soft pull on your credit history does not in any way affect your credit score. 


"Certainly, the government wants us to have good credit score. So, if we are unable to check how we’re doing, how then will we know if we have a good credit health? 

~Sade Sanni, Charissa Realty".


Therefore, if you feel the need to look at your credit score, do not hesitate. Check it. There are various websites that offer this service free of charge.


Hard Inquiry

A hard inquiry occurs when a lender or company makes a request to review your credit reports as part of the loan application process. That request is recorded as a hard inquiry and it will usually impact your credit scores .

There are cases where a hard inquiry may not affect your score, however. For instance, if you are sourcing for a mortgage loan, or a car loan from different sources, within the same timeframe, say within 14 to 45 days, all these inquiries will generally count as one, and will impact your credit score. It is worthy of note however that the said timeframe could vary depending on the credit-scoring model the lender is using, which in most cases isn’t obvious to you. It is therefore considered safer to do all rate shopping for specific loans within a span of 14 days. 


A hard inquiry could lower your scores by a few points, or it may have a negligible effect on your scores. In most cases, a single hard inquiry is unlikely to play a huge role in whether you’re approved for a new card or loan. And the damage to your credit scores usually decreases or disappears even before the inquiry drops off your credit reports for good (hard credit checks generally stay on your credit reports for about two years).



If you notice a hard pull on your credit report that you don’t recognize, please contact the institution that initiated it as it might be a sign that someone is carrying out fraudulent activity using your name.


Final note

A soft pull will not affect your credit score. So, check how healthy your credit is from time to time. Knowing your standing could help guide your subsequent financial decisions.


Ayokunle Saba


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