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Hard vs. Soft Inquiries – What do they mean?

You may wonder about how hard versus soft inquiries affect your credit report and your FICO score.  Examples of soft inquiries include checking on your own credit report and checking on whether you’re prequalified for credit card offers. Hard inquires include credit card applications and applications for loans.

Payday lenders do not report your repayment record to the three major credit reporting bureaus: TransUnion, Equifax and Experian.  But payday lenders aren’t doing you any favors.  Their predatory fees and lending practices can do more damage to your financial health than any hard inquiry by a legitimate lender. By contrast, our superior risk-based underwriting system uses a hard inquiry as one of many tools to approve as many borrowers as possible while maintaining a far lower default rate than payday loans.

Hard vs. Soft InquiriesHow Inquiries Impact Your Credit:

Your credit report and FICO score are affected differently by hard versus soft inquiries. Both hard and soft inquiries show up on your credit report, and each inquiry is listed separately, only hard inquiries are calculated into your FICO score, and each hard inquiry has a small negative.   All Credit inquiries remain on your credit report for two years, but your FICO score only reflects hard inquiries made within the previous 12 months.

Potential lenders also judge hard versus soft inquiries on your credit report differently. Even if you are current with all your bills, many lenders view a large number of hard credit inquiries as a warning sign that your finances are on a decline. It’s even worse if your credit report reflects several recent credit denials.

Minimizing the Effects of Hard Credit Inquiries:

Once you understand how hard versus soft inquiries impact your credit report and FICO score, you may wonder if there is anything you can do to minimize the negative effects of hard credit inquiries. The answer is yes – through a strategy known as rate shopping. In calculating your FICO score, hard inquiries conducted within 45 days for a single type of credit are counted as a single inquiry. So if you’re hunting for an apartment or a new car, all the credit checks from prospective landlords or car dealers are grouped together.

Applying for a bunch of credit cards at once does not qualify as rate shopping.  Instead, apply only for cards where you have a good chance of being approved. Likewise, choosing LoanNow makes sense if you’re worried that past credit problems will keep you from qualifying for a personal loan. We look at your entire credit profile and take extenuating circumstances into account, and say yes when other lenders say no. Don’t let credit problems lure you into the payday loan trap – check out LoanNow today!

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† Loan approvals are subject to underwriting criteria and the approval process may take longer if required items are not able to be verified online or additional items are requested.

‡ Funds will be distributed via ACH. Most banks will post the funds to your account by the next business day. One’s bank will determine when funds are actually available.