There have been numerous questions regarding the impact of credit bureau inquiries on your credit score. Let me set the record straight.

Inquiries can be broken down into two types: hard inquiries and soft inquiries. Hard inquiries are made when you apply for a loan, mortgage or any other credit. These count against yourFICO score and remain on your record for up to two years. Too many hard inquiries will negatively impact your credit score. If you have a lots of hard inquiries on your report you appear to be a credit seeker to prospective lenders. The exception is when you may be rate shopping. All the hard inquiries within a two week period are counted as a single inquiry. This grace period allows for the times when you may be shopping for the best rate for a new loan or mortgage renewal. Multiple inquiries are generally not aproblem for someone with a high credit score, but if you are borderline it could have a serious impact on your ability to borrow or the rates that you are able to get.

The other type of credit bureau inquiry is called a soft inquiry. Soft inquiries are not factored into your FICO score. They are made when a company checks your credit report as part of a review or for the purposes of offering you a pre-approval. Also, when you check your own credit report it is considered a soft inquiry. There are various legitimate reasons why a business or even your employer my request a credit check and all of these do not lower your credit score.

Be aware of the differences between a hard and soft inquiry. When a company indicates they will be doing a credit check determine which type they will be doing. It is becoming more common for some banks to do a hard inquiry when you are simply opening a bank account. Others will do a soft inquiry. If your credit is borderline you may wish to avoid these institutions in favor those that will not do a hard inquiry.

The next time you get a copy of your credit report , which I recommend you do regularly, take note of the hard inquiries and soft inquiries you find. Have any companies pulled a hard inquiry needlessly? If they have take action on it right away. It is your score that is being affected.