If you want to apply for a loan, it is natural that you would carry out inquiries. But do you know the inquiries you carry out can affect your CIBIL score?
If you contact a few lenders, go through their eligibility criteria and apply for a loan from two of them you will trigger multiple inquiries.
There are two types of inquiries, soft and hard.
A soft inquiry is when you obtain your CIBIL report to monitor your score. And if your lender does a review of the existing accounts. In both of these cases, the CIBIL score is not affected and you can make as many soft inquiries as you want without worrying about your CIBIL score.
A hard inquiry is when you apply for a loan or a credit card when the lender performs a credit check by contacting CIBIL and seeking your credit report to evaluate. This inquiry affects your CIBIL score. If you want to make a good impression on a lender in future then there should not be any hard inquiry.
Here are some reasons why hard inquiries should be avoided at multiple bureaus:
- Hard inquiries affect credit reports and there will be less damage if you have a good credit history.
- A single hard inquiry generally does not lower the score but it could if there have been a lot of hard inquiries at the same time.
- Credit inquiries will leave a red mark on your credit report and even if your score is high, the lenders will not be convinced with your profile if they see this.
- Multiple inquiries can also be because of identity theft.
How do you make sure that these inquiries do not affect your credit score?
- Before you apply for any loan just make sure you check your credit score first and if needed work on improving it. This will ensure that your loan application is approved with the minimum number of inquiries.
- If you notice some inquiries on your report that have not been made by you, then immediately contact the respective lender so that you can overcome an identity theft issue in time.
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