The two aforementioned forms of credit information Inquiry methods impact an individual’s credit score in varying degrees. A CIBIL soft Inquiry, for example, has no impact on your overall credit score.
A hard CIBIL Inquiry check, on the other hand, has an impact on your credit score. As mentioned above, lenders conduct a hard CIBIL Inquiry check when an individual applies for a loan or credit card. This helps them understand your financial obligations and your debt-to-income ratio, thereby evaluating your creditworthiness. Credit bureaus keep tabs on the number of hard credit Inquiries made into a borrower’s credit profile. If the checks are infrequent, there is no impact on your credit score.
However, if multiple creditors go through an individual’s credit report often and in a short timeframe, the credit bureaus would categorise the borrower as credit-hungry. This will, in turn, have an adverse impact on his/her CIBIL credit score. Hence, it is advised to not apply for credit from multiple credit organisations at once as well as to keep an interval of at least three months between applications.
Making frequent applications for a loan from numerous lenders simultaneously is one of the few mistakes that a potential borrower can make.
