Introduction
Your credit score is a key factor in determining your loan eligibility and interest rates. But did you know that even something as simple as a bank inquiry can impact your credit score?
Whether you’re applying for a personal loan, home loan, or credit card, banks conduct inquiries on your credit profile to assess risk. These inquiries, especially hard inquiries, can influence your CIBIL score if not managed wisely.
In this blog, we’ll break down how bank inquiries affect your credit score, the difference between soft and hard inquiries, and tips to protect your score.
What Are Bank Inquiries?
Bank inquiries occur when a financial institution checks your credit report or credit score through credit bureaus like CIBIL, Experian, Equifax, or CRIF High Mark.
There are two types of inquiries:
1. Soft Inquiries
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Definition: These are background checks done without your direct application for credit.
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Examples: Checking your own CIBIL score, pre-approved loan offers, or employer verification.
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Impact: No impact on your credit score.
2. Hard Inquiries
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Definition: These happen when you apply for a loan or credit card and the lender pulls your credit report to evaluate risk.
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Examples: Personal loan application, home loan request, car loan, etc.
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Impact: Slight negative impact on your CIBIL score (usually 5–10 points).
How Do Bank Inquiries Affect Your CIBIL Score?
📉 Temporary Score Drop
Multiple hard inquiries in a short period signal to lenders that you’re credit hungry, which may reduce your creditworthiness. Each hard inquiry can reduce your score by a few points.
🧾 Too Many Applications = Risk Signal
Banks view multiple inquiries as a red flag that you may be in financial distress, making them less likely to approve your loan or offer a favorable interest rate.
🕒 Duration of Impact
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A hard inquiry stays on your report for 24 months.
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However, the impact on your score generally fades within 6 to 12 months if no new inquiries are made.
Common Scenarios Where Bank Inquiries Affect You
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Personal Loan Comparison
Applying to multiple banks within days may hurt your CIBIL score, even if you’re just comparing offers. -
Credit Card Applications
Each new card application can trigger a hard inquiry. Frequent applications = lower score. -
Home Loan Enquiries
When banks evaluate your profile for a home loan, hard pulls can affect your score temporarily. -
Loan Rejections
If a bank rejects your application after an inquiry, your score still drops. Repeated rejections worsen your score further.
How to Minimize the Impact of Hard Inquiries
✅ Check Your Credit Score Yourself
Use CIBIL or third-party platforms to check your credit score before applying. This is a soft inquiry and does not affect your score.
✅ Use Pre-Approved Loan Offers
Lenders that provide pre-approved loans perform soft pulls, which do not impact your credit report.
✅ Apply Selectively
Don’t apply to multiple lenders at once. Choose the best option and apply strategically.
✅ Maintain Good Credit Hygiene
Pay your EMIs and credit card dues on time, maintain a healthy credit utilization ratio, and keep old accounts open to support a strong score.
How Many Points Can a Hard Inquiry Affect Your Credit Score?
On average, a hard inquiry can lower your score by 5 to 10 points. If you have a strong credit history (750+), the impact is lower and more temporary.
However, if you make multiple inquiries within a short period, the effect can accumulate, and your score may drop by 20–30 points or more.
Frequently Asked Questions (FAQs)
❓ Does checking my own credit score reduce it?
No. Checking your score yourself is a soft inquiry and does not affect your CIBIL score.
❓ How long do hard inquiries stay on the credit report?
They stay for 2 years, but only affect your score for around 6 to 12 months.
❓ Can I remove a hard inquiry from my CIBIL report?
You cannot remove legitimate hard inquiries. If an inquiry is unauthorized, you can raise a dispute with CIBIL.
❓ Will a single hard inquiry stop me from getting a loan?
No. A single inquiry won’t prevent loan approval if your overall credit profile is strong.
Final Thoughts
Bank inquiries—especially hard inquiries—are a small but important part of your credit profile. While one or two won’t cause serious damage, frequent inquiries can lower your score and reduce your chances of getting approved for loans or credit cards.
✅ Always plan your loan applications strategically.
✅ Monitor your credit report regularly.
✅ Improve your credit score with disciplined financial habits.
