What is a soft and hard inquiry and how does it affect your credit score?

To build and maintain a good credit score, you must access your credit report and score and monitor it regularly. Depending on who accesses your credit report and score, you or the financial institution, and under what circumstances, determine whether it is a soft or a hard inquiry. Impact of hard inquiry on credit score Financial institutions take the individual’s consent before doing a hard inquiry on their credit profile. When a bank or others do a soft inquiry, they get an overview of your credit profile without revealing the details that show up in a hard inquiry. Differences between hard inquiry and soft inquiry Hard inquiry Soft inquiry Occurs when you apply for a credit product like a loan or a credit card Occurs when you check your own credit report or a financial institution checks your credit report to evaluate if you are eligible for a pre-approved credit offer A financial institution requires your consent to do a hard inquiry A financial institution doesn’t require your consent to do a soft inquiry Lowers your credit score by a few points Doesn’t impact your credit score Inquiry information in credit report Your credit report shows the details of the various inquiries made by banks and NBFCs on your credit profile.