| Overview: This guide explains the crucial differences between hard vs soft credit inquiries and their varied impacts on your CIBIL score. You’ll learn how credit checks affect loan applications, when they happen, how long they last on your report, and practical ways to manage inquiries to maintain a healthy credit profile. |
How Hard and Soft Credit Checks Affect Your Credit Score—And Why It Matters
Ever noticed a slight drop in your credit score after applying for a loan? That’s the impact of hard and soft credit inquiries at work. When lenders review your creditworthiness, they perform either of the two. These checks serve different purposes and have varying effects on your credit score.
Understanding the distinction between these inquiry types can help you make informed decisions about when to apply for credit and how to maintain a healthy credit profile.
Understanding Hard vs Soft Credit Inquiries
Hard vs soft credit inquiries differ fundamentally in their purpose and impact. Let’s break down what each means for your financial health:
What is a Hard Credit Inquiry?
A hard credit inquiry occurs when a lender checks your credit report as part of their decision-making process. This happens when you:
- Apply for a personal loan
- Request a new credit card
- Apply for a home loan
- Seek an auto loan
- Request a credit limit increase
These inquiries require your consent (usually provided when you sign a loan application) and can temporarily lower your credit score by 5-10 points.
| Pro Tip: Multiple hard inquiries for the same type of loan (like home loans) within a 14-45 day period are typically counted as a single inquiry by credit scoring models. |
What is a Soft Credit Inquiry?
To understand the meaning of a soft credit check, you need to know when these inquiries happen. They happen when:
- You check your own credit score
- A lender pre-screens you for promotional offers
- Employers conduct background checks
- Insurance companies review your credit profile
Unlike hard inquiries, soft credit checks don’t affect your credit score at all.
| Did You Know? Some lenders, like Airtel Finance, allow you to check pre-approved offers through a soft inquiry, helping you explore credit options without affecting your score. |
Credit Inquiry Impact on Credit Score
The impact of credit inquiries varies significantly based on their type:
| Inquiry Type | Impact on Credit Score | Duration on Report | Requires Permission |
| Hard Inquiry | 5-10 point reduction | 24 months | Yes |
| Soft Inquiry | No impact | May not appear | No |
How Multiple Inquiries Affect Your Score
Consider this scenario: Rahul applies for three credit cards and two personal loans within a month. His credit report shows five hard inquiries, potentially reducing his score by 25-50 points. This drop could move him from an excellent credit bracket (750+) to a good one (700-749), affecting his interest rates and approval odds.
Managing Credit Inquiries Effectively
To minimise the negative impact on your credit score, follow these strategies:
- Space out credit applications by at least 3-6 months
- Research eligibility criteria before applying to avoid unnecessary rejections
- Monitor your credit report regularly to track inquiries
- Dispute unauthorised inquiries if you spot any you didn’t authorise
When you need to check your credit score without triggering a hard inquiry, use the credit score check feature available through trusted providers.
Rebuilding After Multiple Hard Inquiries
If you’ve accumulated several hard inquiries, don’t panic. Here’s how to rebuild your credit:
- Make all existing loan payments on time
- Reduce credit card balances to below 30% of limits
- Avoid new credit applications for 6-12 months
- Continue monitoring your credit report regularly
Remember that hard inquiries impact your score less as time passes, and they drop off your report entirely after two years.
If you’re rebuilding after hard inquiries or planning a new loan application, you can consider Airtel Finance. They offer tailored credit solutions designed to fit your financial profile so that you can stay in control of your credit health.
FAQs
1. How many points does a hard inquiry reduce from my credit score?
Hard inquiries typically reduce your CIBIL score by 5-10 points, while soft inquiries have no impact whatsoever.
2. Can I remove hard inquiries from my credit report?
You can only remove incorrect hard inquiries by disputing them with the credit bureaus.
3. How long does a soft credit check take to process?
A soft credit check typically takes seconds to minutes to complete and provides immediate results without affecting your score.
4. Will checking my own credit score hurt it?
No, checking your own score is considered a soft inquiry. Self-checks never impact your credit score.
5. How long should I wait between credit card applications?
Financial experts recommend waiting 3-6 months between applications to minimise credit inquiry impact and improve approval chances.
