A:

Free credit reports do not impact your credit score. Credit inquiries are divided into two categories: soft inquiries and hard inquiries. Free credit reports use soft inquiries to determine your credit, and soft inquiries have no impact on your credit rating or credit score. Hard inquiries, however, do impact your score.

Soft Inquiries

Soft inquiries are typically initiated by an individual or company looking at your credit for background purposes. When you personally initiate a credit check, including for a free credit report, it is considered to be a soft inquiry. Soft inquiries usually appear on your credit report, but they don't impact your credit score.

Hard Inquiries

Hard inquiries are generally conducted by lenders to decide if they should lend you money. These inquiries have a tangible impact on your score. Common examples of hard inquiries are those conducted when you go the bank and apply for a mortgage or to an auto dealership and apply for a car loan, but other credit inquiries such as those conducted when you rent a house or obtain a new mobile phone contract can come across as hard inquiries.

A hard inquiry impacts your score by a few points and remains on your credit report for two years. One hard inquiry may not be a problem, but lenders may look upon multiple high inquiries in close succession unfavorably. Multiple inquiries in a row can add up to a significant decrease to your credit score. From a lender's point of view, these inquiries could signal that you are having difficulty obtaining credit.

If you find a hard inquiry on your credit report that you are certain occurred without your permission, you can dispute it through the appropriate credit bureaus. You have the right to obtain one free credit report every 12 months from each of the national credit reporting companies: Equifax, Experian and TransUnion.

RELATED FAQS
  1. Does shopping for the best interest rate affect my credit score?

    Learn about hard and soft credit inquires and how shopping for credit may negatively affect credit scores. Explore strategies ... Read Answer >>
  2. Do inquiries for preapproved offers affect my credit score?

    Find out what types of inquiries are on a credit report, if they affect a credit score and how much a score is affected by ... Read Answer >>
  3. How does applying for student loans hurt my credit score?

    Discover whether shopping for student loans negatively impacts your credit score, and how concentrating your applications ... Read Answer >>
Related Articles
  1. Personal Finance

    Credit Scores: Hard Vs Soft Inquiries

    Creditors and even prospective employers want to know how well you handle your money. They use soft and hard credit inquiries to find out.
  2. Personal Finance

    Do Credit Inquiries Hurt Your Credit Score?

    There are two types of credit inquiries, but only one can lower your credit score. Learn the difference and act accordingly.
  3. Personal Finance

    Credit Karma Doesn't Hurt Your Credit Score, and Here's Why

    Credit Karma is a popular option for checking credit histories for free, and it doesn't hurt your credit score.
  4. Managing Wealth

    5 Common Misconceptions About Your Credit Report

    Your credit report is one of the most important factors in determining your ability to get loans and new credit and has a major influence on your rates.
  5. Personal Finance

    The 5 Biggest Factors That Affect Your Credit

    Credit companies rely on these factors to determine whether to lend to you and at what rate.
  6. Personal Finance

    Common Things That Improve And Lower Credit Scores

    Credit scores are used by lenders to estimate credit risk. Find out how you can better earn the trust of lenders and reap the benefits.
  7. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
  8. Personal Finance

    4 Habits That Damage Your Credit Score

    Many common money habits can affect your credit score negatively without you even knowing it.
  9. Managing Wealth

    12 Things You Don’t Know About Your Credit Report

    A good credit score is essential to securing a mortgage, obtaining a car, and getting other types of loans. But do you know what's on your credit report?
  10. Personal Finance

    7 Things You Didn't Know Affect Your Credit Score

    Having a good credit score plays a big part in being approved for a loan or a mortgage. Here are some things to watch for to keep your credit score healthy.
RELATED TERMS
  1. Hard Inquiry

    A type of credit report check that may lower an individual's ...
  2. Account Inquiry

    Any inquiry into an account, whether it be a depositary account ...
  3. Appreciative Inquiry

    Definition of appreciative inquiry
  4. Credit Score

    A credit score is a number ranging from 300-850 that depicts ...
  5. Credit History

    A record of a consumer's ability to repay debts and demonstrated ...
  6. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
Trading Center