Does credit score reduce by repeatedly checking credit score? What is hard inquiry and soft inquiry?
To know whether it reduces by repeatedly checking the score or not, you will first have to understand hard inquiry and soft inquiry. Know here which things affect your credit score.
Credit Score: It is said that repeatedly checking your credit score reduces your CIBIL score. But is this true? We don't know about this, we just accept what we hear as true. There can be many reasons for low credit scores, but generally, the reason for low CIBIL scores is not repaying the loan on time. Not making a repayment on the due date affects your credibility and reduces your credit score. To check whether it reduces by repeatedly checking the score or not, you will first have to understand Hard Inquiry and Soft Inquiry.
What is a hard inquiry?
When a bank or NBFC checks your credit score, it is called a hard inquiry. If multiple lenders check your credit score simultaneously, it may affect your CIBIL score. When a person goes to take a loan, he contacts several banks simultaneously. At that time his CIBIL score is checked by the bank. In this way, when different banks check someone's CIBIL score, the score drops by a few points. Your credit report gives details of when hard inquiries have been made on you.
What is a soft inquiry
When you check your score through an app, it is called soft enquiry. Generally, soft inquiry does not make any difference to your credit score. Rather, if you check your credit score from time to time, you remain aware of your score. In such a situation, if the score falls, you can take necessary steps to improve it. In fact, many financial experts recommend that the credit score should be checked every 3-6 months. Apart from this, if you are going to apply for any kind of loan or credit card, then you should definitely check your credit score once.
These are also the reasons for falling credit score
Credit score is determined between 300 to 900. Generally a credit score above 750 is considered good. Let us tell you that the main reason for falling credit score is of course not making the loan repayment in the stipulated time, but apart from this many other factors also affect your score like-
Credit utilization ratio glitch
Applying for loans multiple times in a short period of time
Settle loan
Becoming a loan guarantor for someone who does not repay the loan on time
Not making credit card payment on time etc.
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