How Credit Inquiries Affect Canadians: Frequently Asked Questions

Credit inquiries are a common part of the credit process. Here are FAQs about how credit inquiries affect Canadians:

1. What is a credit inquiry?

A credit inquiry is a request to view your credit report. There are two types: “soft inquiries” and “hard inquiries.”

2. What is a soft inquiry?

A soft inquiry occurs when you check your own credit report or when a lender pre-approves you for an offer. Soft inquiries do not affect your credit score.

3. What is a hard inquiry?

A hard inquiry occurs when you apply for credit, such as a credit card or loan. Hard inquiries can temporarily lower your credit score.

4. How much can a hard inquiry affect my credit score?

A hard inquiry can lower your credit score by a few points. The impact is typically small and temporary.

5. How long do hard inquiries stay on my credit report?

Hard inquiries stay on your credit report for up to two years but their impact on your score diminishes over time.

6. Can multiple hard inquiries hurt my credit score?

Yes, multiple hard inquiries in a short period can lower your score. It’s best to space out credit applications when possible.

7. How can I minimize the impact of hard inquiries?

Apply for credit only when necessary and research lenders before applying to avoid unnecessary inquiries.

8. Do all lenders treat hard inquiries the same way?

Lenders may view hard inquiries differently, but most understand that a few inquiries are normal. Excessive inquiries may raise concerns.

9. Can I dispute unauthorized hard inquiries?

Yes, if you notice an unauthorized hard inquiry on your credit report, you can dispute it with the credit bureau.

10. How can I track my credit inquiries?

Regularly check your credit report to monitor and track all credit inquiries. Credit monitoring services can also alert you to new inquiries.