A hard inquiry can lower your credit score by a few points or none at all

A hard inquiry can lower your credit score by a few points or none at all

A hard inquiry – also known as hard pull or hard credit check – usually occurs right before your lender, bank, or financial institution needs to make an underwriting decision. Multiple hard inquiries in a short period can signal to loan lenders that you could be a high-risk customer.

It can take place right before you take out a car loan, get a home mortgage, or get a credit card

A soft inquiry – also known as a soft pull or soft credit check – often happens when credit card companies or lenders check your credit score to see if you qualify for a product or service. Employers may also do a soft inquiry along with the background check before hiring you. Short-term lenders and installment loan lenders will often do some form of soft inquiry to determine whether they will lend money to you. A soft inquiry doesn’t hurt your credit score but is visible and will show up on your credit report.

Types of installment loans

  1. Personal loan – A personal loan is a “catch-all” term usually referring to a loan that is not secured by collateral and repaid in installments. Personal loans will usually have a term of 1 to 5 years and will need to be paid back in periodic installments, usually monthly.