Soft Inquiry vs Hard Inquiry: Key difference and its impact on your credit score

Soft inquiries do not impact your credit score as they are only informational checks. Whereas, Hard inquiries may cause a small, temporary dip in your score since they are linked to new credit applications.

A soft inquiry is a credit check for informational purposes like pre-approved offers or self-checks and does not affect your score. On the other hand, a hard inquiry happens when you apply for credit such as a loan or credit card and may slightly lower your score.

There is no fixed limit under RBI guidelines, but multiple hard inquiries in a short period may indicate high credit demand, which can reduce your credit score and affect approval chances.

A hard inquiry is performed when you apply for a loan, as lenders assess your creditworthiness before approving the credit.

Hard inquiries typically stay on your credit report for up to two years, though their impact on your credit score usually decreases within a few months.