Types

• According to the financial reference website Bankrate.com, there are two types of credit score check -- hard inquiries and soft inquiries. A soft inquiry happens when you check your own credit score, when a company is prospecting your credit score while deciding whether to extend you a line of credit, and when an employer looks at your score. Meanwhile, a hard inquiry is when a lender looks at your score when you apply for a line of credit.
  
  

Effects

• Soft inquiries do not harm your credit score at all. Although these inquiries are visible to you when you view your report, they are not visible to others. However, hard inquiries will remain on your score for two years and will negatively affect your credit score for a single year. However, the total reduction in your score is usually very small.
  
  

Significance

• Generally, the only time that a credit check can harm your credit score is if the credit check derives from a borrower's attempt to secure new credit. For example, if the credit check is made by a mortgage company to whom the borrower is applying, or by an auto financing company, this will pull down the borrower's score.
  
  

Misconceptions

• According to the Privacy Rights Clearinghouse, you do not need to be concerned if you have recently applied to a number of lenders, such as when applying for a loan for a home or a car. Generally, similar inquiries made within 30 days generally count as only a single inquiry, Your credit score is affected as if only one inquiry had been made.
  
  

Explanation

• The reason that a hard inquiry harms your credit score is that credit companies consider attempts to take out new credit to be a risk factor in defaulting on loans. People who take out more loans are generally considered to be at a higher likelihood of defaulting; by this same rationale, people who apply for loans receive a small ding to their credit score, as it may be a sign of financial trouble.