29-Oct-2016 written by : FSI-Team
Shobha wanted a personal loan to pay for her upcoming marriage ceremony. As a responsible credit user she decided to first contact multiple banks to compare home loan options. After going through their terms and conditions she applied for the loan in three of these banks, which she felt were giving better deals than others. However, little did she know that her actions were far from wise. What she did was triggering multiple enquiries on her CIBIL report, as a result of her multiple loan applications. Thus, her loan application was rejected by all the banks, as they noticed the enquiries and considered it a "credit hungry behaviour".
An enquiry may or may not have an effect on your CIBIL. It depends on whether the enquiry is a soft enquiry, or a hard enquiry.
Soft Enquiry: When you obtain your CIBIL report from the agency, to monitor your score, or to check for discrepancies, then it is viewed as a soft enquiry. The same goes for when your lender or bank does a periodic review of their existing accounts. In either of these cases your CIBIL score is not impacted. Plus, you can make as many soft enquiries as you want without worrying about your score.
Hard Enquiry: When you apply for a loan or a credit card, then the lender invariably performs a credit check. They contact CIBIL and seek your credit report for evaluation. This kind of enquiry is viewed as a hard enquiry, and it bears significance, for it impacts your credit score. In fact, the amount of damage that your score takes is directly proportional to the total no. of enquiries made in a short period of time. If you want to make a good impression on your future lender then you would not want to look at multiple hard enquires on your report.
Here are some of the ways how hard enquiries can affect your CIBIL score:
By avoiding hard enquiries on your credit report you can save your score from falling. Here are some tips on preventing your score from enquiries:
All the enquiries that have been made on your report remain there forever. However, you need not to panic, for most financial institutions only consider the enquiries made during the last two years. Just try to keep your CIBIL score high before you apply for loans or credit cards, and you will be fine. You can also take help from a professional credit consulting company such as CreditSudhaar, if need be.