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Inquiry
Explanation:
In general, an inquiry is when a third-party (e.g. creditor, lender, employer, landlord, etc.) asks to see your credit report from one of the three major credit bureaus (i.e. Experian, Equifax, TransUnion). More specifically, there are two types of inquiries: hard inquiries and soft inquiries.
A hard inquiry is when the third party requests your credit report with the intent of making a lending decision, as would be the case when a bank is evaluating a credit card or loan application. Hard inquires are listed on your credit reports, and multiple inquiries can be perceived as desperation for credit, which will signal risk to creditors and may result in temporary credit score damage. However, your FICO Score, the most commonly used credit score, considers multiple inquiries from mortgage, auto loan or student loan companies within a short period of time as being a single inquiry. FICO differentiates these types of inquiries from those for, say, credit cards because they understand that multiple applications are merely part of the process of shopping around for the best loan rates.
Soft inquiries are inquiries related to pre-qualification (e.g. direct mail credit card offers) as well as those used by employers and landlords to assess the risk of future applicants.
Our Thoughts:
When applying for credit cards, you should keep in mind the danger of having multiple hard inquires appear on your major credit reports within a short period of time. You should therefore only apply for credit cards for which your credit score gives you a good chance of being approved and avoid applying en masse. If you are not sure of your credit score, we recommend either ordering it from FICO or using a Free Credit Estimator to get a general sense of where you stand. Should you find your credit card applications being routinely declined, you might want to simply open a secured credit card (as close as it gets to a guaranteed approval credit card) and concentrate on credit building.