Tipping point: What is the difference between hard and soft enquiry?

What is the difference between hard and soft enquiry?

When you apply for credit, the lender checks your credit report. This is known as an enquiry. Enquiries are of two types: Hard and soft. Imagine that you want a home loan and apply to several banks because you are not sure which one will lend to you. All of them will pull out your credit report before they decide. Such hard enquiries get reflected in your report and they pull down your credit score. A soft enquiry does not affect your score. A soft enquiry happens when you check your own credit report.  

What should you do? 

Avoid generating too many hard enquiries. When you make too many loan applications simultaneously, it signals that you are credit hungry. Do the due diligence and apply only to a lender whose terms you like.