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Can applying ‌for a credit product impact your credit score?

  • Updated

A credit check—sometimes called a credit inquiry—is performed when applying for standard credit products. You’ll be asked for consent to perform a credit check since it can impact your credit score.

Impact on your credit score

When you apply for a new credit product, the financial institution performs a credit check to access your credit file and verify your credit worthiness. This is recorded on your credit file as a credit inquiry.

It’s good to remember that not all credit inquiries are the same. Two types exist, the hard credit checks and the soft credit checks. 

Hard credit checks impact your credit score. They occur when you apply for credit products such as credit cards, mortgages, and car loans. The lender will request your credit file to decide whether to approve or decline your application.

According to TransUnion, hard credit inquiries are removed from your credit reports 2 years after they’re made.

Soft credit checks won’t show up on your report, such as when you look up your credit score.

Ways to help build your credit score

Neo Secured Credit

A secured credit card can help users establish or re-establish their credit. Signing up for a secured credit card does not impact your score as no hard checks are made for this product. You can read more on how the Neo Secured Credit card works. 

Calculate your score

Credit inquiries make up 10% of your credit score. To understand other factors that make up your score, you can check what makes up your credit score.

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