First let us talk about what a credit report is. A credit report is a summary of your financial history that helps lenders determine your credit worthiness. Most of the time your credit report is pulled when trying to apply for loans, new lines of credit, pre-approval offers, account reviews, etc. Depending on what your credit report is getting pulled for will also depend on if it will be a hard or soft pull and if it will impact your credit score or not.
What is a hard credit Inquiry?
Hard inquiries on your credit report are usually done by lenders when you apply for loans (mortgage, auto, and school) and new credit lines. Lenders want to make sure that they can trust with these large items by checking how you are currently handling your finances as well as how you handled them in the past. This “hard pull” on your credit usually is reported to the credit bureaus and results in small drop in your credit score, but it is nothing to worry about if you are not applying to many loans or credit cards at once.
What is a soft credit inquiry?
Compared to a hard inquiry, a soft inquiry on your credit report will not be reported to the credit bureaus and will not impact your credit score. Soft inquiries include checking your own credit report, applying for a preapproval, signing up for a credit repair service, etc.
In conclusion, your credit report is an extremely important tool to have and to manage wisely. Make sure that your credit score is good before applying to anything that will result in a hard inquiry pull on your credit report, especially if applying to different lenders. You want to be able to still have a good credit score even after you score goes down a little form the hard pull.