I already know you’re going to go to the mall and when you make your transactions, you’ll be asked whether you want to apply for a store credit card. Store credit cards are essentially useless. Stick with the major cards like MasterCard, American Express and Discover which allow you to accumulate points for travel, cash back and other perks. Minimize unnecessary inquiries on your credit reporting by declining the store credit card. Know the differences between hard and soft credit inquiries.
What is a hard inquiry?
Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision. They take place when you apply for a loan, credit card or mortgage, and you have to authorize them. Hard inquiries might lower your credit score by a few points and they may remain on your credit report for two years. As time passes, damage to your credit score usually decreases or disappears, often even before the hard inquiry falls off your credit report.
What is a soft inquiry?
Soft inquiries occur when a person or company checks your credit report as part of a background check. Examples include employer background checks, getting “pre-approved” for credit card offers, apartment rentals and checking your own credit score. A soft inquiry may occur without your permission. Soft inquiries may be recorded in your credit report, depending on the credit bureau, but they won’t affect your credit score.
One of the biggest misconceptions is that checking your own credit score will hurt your credit score. This is not the case. You can check your credit scores as often as you like without affecting your credit score negatively or decreasing your score.
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