I have seen people getting confused among the words credit inquiries, credit score, credit reports, etc. Well, I agree that these terms are not that easy to play around with but in the end, it is all related to those three digits number showing up more than 700. I assume everyone knows the meaning of that at least. Now let’s get back to the actual question which is what credit inquiry is. It may sound technical to understand for some people so let me explain it to you guys in a very simple manner.
Suppose you have filled an application form for a new credit card (inquiry removal) and now you are waiting for your card to get processed as soon as possible. Before processing any such cards by the bank premises, they do a background investigation whether the person whom the credit card will be issued holds a good record in terms of taking loans and credit which helps them to decide whether you are trustworthy to lend money or not. It is as simple as that!
Every bank run a credit inquiry before issuing any credit card or loan to you. However, if you are new to the world of credit cards, your income is the only thing that matters. There are mainly two types of credit inquiries take place which is given below –
1 – Soft Credit Inquiry – It is a kind of inquiry where your credit score is not being reviewed deeply. The potential lender will only inquire to check if you are qualified enough to get the benefits of financial products. For example, if any of the credit card issuer performing an inquiry in case you have applied for a new credit card and he/ she is not digging out your past happenings, it will fall under the category of soft credit inquiry.
2 – Hard Credit Inquiry – As the name defines, it is the hard inquiry where the lender performs the inquiry in case you have applied for a business loan, premium credit card, etc. Hard credit inquiry asks for the previous healthy background of loans and credit and based on that you will be getting a new one. For example – if a person is applying for a loan for small business, the lender will definitely carry out the hard credit inquiry just to make sure nothing is suspicious in handing over the credits.