A hard inquiry basically means that a lender, creditor, or other company has checked your credit score to determine whether or not you qualify for a loan or other form of credit. Hard inquiries will show up on your credit report and can also potentially affect your credit score.
Any time you’re applying for a loan, credit card, line of credit, or other financial product the lender will need to make sure that you’re trustworthy. They want to be sure that you as a borrower are someone who repays their debts on time. The best way for them to do this is to check your credit score. When they pull your credit score to make sure you’re eligible for a loan, this is called an inquiry. And any inquiry that can affect your credit is called a “hard inquiry.”
A hard inquiry does show up on your credit report. It may stay on your credit report for a couple of years. Having a lot of hard inquiries makes it look like you’re applying for a lot of loans, which could potentially lower your credit score. This is because one of the things that affect your overall score is how many new loans or financial products you apply for. Since applying for a bunch of new loans may not be financially responsible, it could lower your credit score.
This is why it’s important to be careful when you’re in need of a new loan. Make sure you’re sure that the loan you’re applying for is the right one for you and that you really do need it. Be deliberate about the loans you apply for and make sure you do thorough research.
That being said, hard inquiries are unavoidable for most people. Applying for an auto loan, mortgage, personal loan, and other types of loans will all usually involve a hard inquiry or hard credit check. The best you can do is limit the amount of them that show up on your credit report. This will help you keep your credit score high.
Credit Education & Credit Reporting