Imagine you’re at a party and you see someone going from person to person, frantically asking to borrow twenty bucks. It doesn’t matter if they are a totally nice person; you’re probably going to wonder if something is going wrong behind the scenes, right.
That is pretty much exactly how banks and credit card companies feel when they look at your credit history and see a flurry of credit inquiries. To them, it looks like you are desperately hunting for cash. But is it always a bad sign? Not necessarily, but it is super important to understand why those little marks on your file make underwriting departments sweat.
The Difference Between a Soft and Hard Peek
First things first, we have to talk about how not all credit checks are made equal. You’ve got your soft inquiries and your hard inquiries. A soft pull happens when you check your own score, or when a background check is run by a new landlord. These don’t hurt your credit score at all and lenders can’t even see them.
Hard inquiries, though, are a totally different beast. These happen when you actually fill out an application for a new credit card, a car loan, or a mortgage. You are giving the lender permission to dig deep into your financial history. Each of these hard pulls usually shaves a few points off your score, and they stay on your credit report for up to two years.
So, why do these hard pulls make banks so nervous? It really boils down to risk management. When a bank sees five or six hard inquiries popping up in a short window of time, their internal alarms go off. They start thinking you might be in some kind of financial trouble.
Are you losing your job. Did you run up too
