Credit Card

What is a Hard Inquiry in CIBIL Report?

06 Dec 2019 3 min read
Credit Card: Know More About the Affect of Hard Inquiry in CIBIL Report - Afinoz

Your credit score is a classification of your creditworthiness based on a comprehensive analysis of your credit history. It is one of the most important factors that help you get access to credit cards and loans. It is a three-digit number ranging from 300 to 900 based on a credit report information, typically accessed from CIBIL (Credit Information Bureau India Limited). Your credit report lists personal information such as your name, phone number and PAN number. It also includes your credit history such as number and type of loans and credit cards you have or had in the past, and whether you have defaulted on them or paid those credits on time. 

A credit report also lists credit inquiries, especially hard inquiries. When you apply for a new loan or credit card, lenders request a copy of your credit report as a soft inquiry or hard inquiry. They examine your credit report to evaluate your riskiness as a borrower based on your credit history. 

What is a hard inquiry?

A hard inquiry, also known as a hard pull, is a credit information requested by a lender from a credit-reporting agency. When you apply for a new loan or credit card, a lender makes a request for a copy of your credit report to know about you in detail before approving your application. Hard inquiries occur only when you authorize a lender to pull your credit report. It provides the lender with a full credit report on you and is retrieved by your PAN number. 

Apart from your payment and credit history, lenders can also see hard inquiries made in the last two years. While soft inquiries, which include less information than hard inquiries, have no effect on your credit card, hard inquiries are a little counterintuitive and may raise red flags for lenders because they may indicate that you are not serious in handling your debt or are at the risk of overspending. 

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How long does a hard inquiry remain in your credit score?

Hard inquiries stay on a borrower’s credit report for two years. Multiple hard inquiries in a short period of time can temporarily ding your credit score by some points. However, the effect of a hard inquiry starts to fade away long before it is taken away from your credit report. However, you should not apply for too many credit cards and loans carelessly. Because doing so will be considered as an attempt to exceed the credit limit, which creates higher risks for lenders.

Can you dispute hard inquiries?

You should check your CIBIL report periodically. It goes a long way in helping you to ensure the information on your credit report is accurate. If something seems amiss – your credit report contains a hard inquiry from a lender that was not authorized by you – you must inform the CIBIL about the same. However, you can crosscheck the error with the credit report generated by another credit bureau. 

You can access your credit report for free before you apply for new credit. Not only does it help you figure out as to when is the right time to apply for a loan or credit card, but you can also check an error and then dispute it with the credit bureau. 

Can you avoid hard inquiries?

Well, making a few hard inquiries doesn’t harm your credit score. It is not a smart decision to avoid hard inquiries, but you should minimize them. Know your eligibility criteria and don’t apply for credit, like loans and credit cards, you don’t qualify for. It is not only a hard inquiry but rejection as well. Apply for a loan or credit card you are eligible for. You can find out the range of your credit score and eligibility without hurting your credit score. You should get a free credit score from your current lender.

Stop applying for loans and credit cards with multiple lenders, instead, use online platforms to know your eligibility and compare rates from lenders. You need a few details to know your eligibility online, and soft searches are outside of a lender’s knowledge.   

Examples of soft and hard inquiries 

The difference between soft and hard inquiries is an inquiry made by any financial or insurance institution with your permission boils down to a hard inquiry, and when someone conducts a check on your credit score without your permission or knowledge is considered as a soft inquiry. Let’s have a look at some examples of soft and hard inquiries.  

Common hard inquiries

  • New credit card application
  • Personal loan application
  • Education loan application
  • Mortgage application
  • Line of credit application
  • Auto loan application
  • Insurance application

   Common soft inquiries

  • Pre-qualified credit card offers
  • Pre-qualified personal loan offers
  • Pre-qualified insurance offer

You must access your free credit report from any of credit bureaus to check your credit score and see hard inquiries on your credit report are authorized by you or are instances of fraud or identity theft. If you find anything unauthorized or controversial, you should dispute it with the credit bureau immediately.

Read More: How to Correct the CIBIL Report Mistakes?