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Credit inquiries are requests by financial institutions to access your credit report, which helps them assess your creditworthiness before approving loans, credit cards, or other financial products.
Your credit report includes details like repayment history, outstanding debt, and financial behaviour. These factors directly influence your credit score, a three-digit number that reflects how reliable you are at managing credit.
There are two types of credit inquiries: hard and soft, each affecting your credit profile differently based on purpose and frequency.
Credit inquiries come in two varieties: soft inquiries and hard enquiries. Let us understand each type of enquiry properly:
A hard credit inquiry happens when a lender checks your credit report to see your current financial situation. This usually happens when you apply for a loan or a credit card. They look at your credit history, how you have managed payments, and how much you already owe.
A soft inquiry happens when your credit report is checked for informational purposes, not for a loan or credit approval. Only you can see these inquiries on your report, and they do not impact your credit score or your ability to get credit in the future.
Here are some ways a credit inquiry can impact your CIBIL score:
A hard inquiry can impact and reduce your credit score. The reduction is usually only a few points. It typically ranges between five and ten. Your credit history and the number of recent inquiries influence the impact.
Your credit score may drop further when multiple hard inquiries occur within a short period. Lenders may see repeated inquiries as a sign of excessive credit-seeking or financial distress.
Here are some tips to manage your credit card inquiries effectively:
You need to monitor your credit report regularly to track enquiries. This also helps you identify any errors. Use authorised credit monitoring services or obtain free annual credit reports to stay updated on your credit activity.
Maintain a strong credit history by avoiding high credit utilisation. Keep credit card balances low and make timely payments. A robust credit profile can reduce the impact of credit card inquiries on your score.
Apply for credit using a strategic approach. Research various options and understand the eligibility criteria before applying. This reduces unnecessary inquiries and helps you find options that match your credit profile.
Here are some crucial pointers to remember to maintain a high credit score:
Your credit application remains straightforward and free of complications. Every financial institution remains willing to extend credit to you. You can review your options and choose one that fits your financial plan.
You have the ability to negotiate with lenders for better loan terms. These may include higher loan amounts, increased credit limits, and preferred interest rates.
You will receive pre-approved credit card offers and enhanced credit limits. These may include added benefits or loan offers with larger sums and competitive interest rates.
Insurance providers examine your credit history and score. This helps them assess your ability to make timely premium payments. A strong credit record improves the chances of approval.
Understanding how CIBIL inquiries affect your credit score is a key aspect of financial literacy. Hard enquiries, triggered by credit or loan applications, can temporarily lower your score. In contrast, soft enquiries—such as checking your own credit score—have no impact.
You can maintain a healthy credit profile by limiting hard enquiries, regularly monitoring your credit report, and following responsible credit practices.
Credit inquiries are checks made on your credit report by a financial institution, lender, or authorised entity. They occur when someone reviews your credit information to assess your creditworthiness.
A hard enquiry may reduce your CIBIL score by 0 to 5 points. However, checking your own score is considered a soft enquiry and does not affect your CIBIL score.
You can check your CIBIL score as often as needed. Since it is treated as a soft enquiry, it will not impact your credit score.
No, not all credit applications lead to hard enquiries. Some lenders may begin with soft checks to screen applicants. A hard enquiry is usually made only at the final stage of approval.
Legitimate hard inquiries from credit applications you made cannot be removed. They will automatically disappear from your credit report after 24 months. However, you can take steps to remove unauthorised or incorrect hard inquiries:
Get your credit report from CIBIL, Experian, CRIF High Mark, or Equifax
Check for any hard inquiry you did not authorise or recognise
Raise a dispute with the credit bureau, providing the inquiry date, lender name, and reason
Contact the concerned lender and request them to send a correction to the bureau
Follow up with the credit bureau to track the resolution, which usually takes up to 30 days
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