What is a Hard Inquiry?

A hard inquiry is an event in which a copy of an individual’s credit report is requested. That request may come from individuals such as landlords, or from a financial institution that the individual currently does business with or is seeking to establish a relationship with by opening some sort of account. The hard inquiry is the result of a credit check conducted by the institution as part of the process of assessing the individual’s creditworthiness. Each time an inquiry of this type is received by a credit reporting agency, the request is recorded as a line item on the credit report, allowing the individual to have some idea of how often this type of request is logged and by what type of agencies or institutions.

The hard inquiry is classed differently than what is known as a soft inquiry. The latter is essentially the individual requesting a copy of the credit report for his or her own review, rather than an institution evaluating the subject for creditworthiness. In some cases, inquiries from an employer or a law enforcement agency will also be considered a soft inquiry rather than a hard one. This is important to keep in mind, since an inordinate number of hard inquiries logged within a short period of time can actually have a detrimental effect on the credit rating. For this reason, individuals should refrain from applying for a number of different credit cards or loans in a single month or quarter.

Along with potential creditors accessing credit reports to determine if the individual can be approved for a new account or loan, existing creditors may also generate a hard inquiry from time to time. Credit card companies typically do this once or twice a year if the individual is being considered for a credit line increase. Insurance companies may also initiate a hard inquiry from time to time, and even landlords may choose to do so as a means of making sure the tenant is staying current on his or her obligations and is less likely to begin missing rental payments.

It is important to note that a hard inquiry found on a credit report does not automatically mean that a creditor is concerned. Often the process is routine and may actually result in a favorable outcome for the individual, such as a credit line increase. At the same time, individuals should take the time to review their credit reports at least annually and pay close attention to who has requested copies of the reports. Inquiries by entities that the individual is unfamiliar with may indicate the need to investigate those inquiries in more detail, to make sure they were legitimate and not connected with some attempt at fraud or identity theft.