What is a "soft inquiry"?

What is a "soft inquiry"?

• A. A type of inquiry that affects credit score
• B. A background check conducted by an employer
• C. An inquiry that does not affect credit score
• D. A request for increase in credit limit

Answer: (C)

A "soft inquiry" refers to a type of credit check that does not impact a person's credit score. This occurs when a lender or service checks a person's credit report, but it is not done in connection with a credit application. Common instances of soft inquiries include promotional credit checks, personal credit checks by the individual, or background checks performed by employers. As a result, these inquiries provide information about the creditworthiness without influencing the credit score, allowing individuals to understand their credit situation without negatively impacting it. Understanding the difference between soft and hard inquiries is crucial for managing one's credit effectively, as only hard inquiries—those made in relation to applying for credit—can cause a decrease in the credit score.

A "soft inquiry" refers to a type of credit check that does not impact a person's credit score. This occurs when a lender or service checks a person's credit report, but it is not done in connection with a credit application. Common instances of soft inquiries include promotional credit checks, personal credit checks by the individual, or background checks performed by employers.

As a result, these inquiries provide information about the creditworthiness without influencing the credit score, allowing individuals to understand their credit situation without negatively impacting it. Understanding the difference between soft and hard inquiries is crucial for managing one's credit effectively, as only hard inquiries—those made in relation to applying for credit—can cause a decrease in the credit score.