Understanding Credit Report Inquiries - Very Simply Put

Inquiries are required by law to be on your credit report for 2 years. 
Inquiries are only about 10% of your credit score. 
Because it can impact your credit score you still need to manage it to optimize your score. Especially if you are now or will be actively looking for credit in the near future.
Types of inquiries are described by the industry jargon of "hard" and "soft."
Soft inquiry

• These inquiries will show up on your credit reports for six months. 
• They are not displayed to lenders who pull your credit reports. 
• They are NOT counted as a part of any credit scoring models.
• A lender has purchased your name from the credit bureaus for the purposes of sending you some sort of credit solicitation in the mail.
• A lender with whom you already have credit reviews your credit report.
• One of your credit card companies wants to re-issue your credit card before the expiration date.
• You have asked for a copy of your own credit reports, either directly from the credit bureaus or through one of the various online services that resell credit reports.

Hard inquiry

• You gave permission to check your credit report and score.
  • Creditors, Insurance co, employers, etc.
• Recent hard inquiries are considered a risk factor in credit scoring models
• Can impact your score for one year
• Hard inquiries can only happen when you apply for credit such as:
  • Apply for a car loan
  • Apply for a student loan
  • Prequalify or apply for a mortgage or other home-related loans such as a home equity loan
  • Fill out and return any of the many “pre-approved” offers of credit that you get in the mail
  • Take advantage of “instant credit” offers when you are at the shopping malls
  • Apply for a store credit card from an electronics retailer
  • Apply for credit from any lender using the internet
• You may be able to "bundle" your inquiries when you rate shop. The scoring models recognize the prudent practice of searching for the best rates. Therefore they count multiple inquiries of the same type as one inquiry. It's called “Inquiry De-duplication.” 
  • Time periods to rate shop vary from 14 to 45 days depending on the scoring model.
  • Must all be the same creditor category such as banks, credit unions, mortgage companies, student loans, auto finance, insurance companies, etc.
    • Can be tricky for the consumer to know exactly how the lender is categorized at a credit bureau.
• Each revolving charge inquiry is treated as a hard inquiry regardless of timing.

Best practices for credit report inquiries:

• Only apply for credit strategically.
• Resist in-store and online offers for additional savings, if you apply for a branded credit card.
  • Generally, if approved, the low limit, hard inquiry, and possible destruction of your CUR (credit utilization ratio) are not worth it.
  • However, major purchases such as appliances, electronics, and furniture may be exceptions, if the terms are truly beneficial. (No interest for a year, 90 days same as cash, etc.)
• Challenge hard inquiries at the credit bureau.  You can remove a hard inquiry if:​
  • The inquiry occurred without your knowledge.
  • The inquiry occurred without your approval.
  • The number of inquiries exceeded what you expected.
  • You felt pressured into approving the hard inquiry.

---