Applying for credit, such as a credit card, creates a hard inquiry, and hard inquiries can lower your credit score. Soft checks, including checking your own report or score, don’t affect it. When a lender checks your credit, the bureau records an inquiry on your report. In most provinces you give consent for that check, and signing a credit application counts as consent.
Hard inquiry or soft check: what’s the difference?
| Hard inquiry | Soft check | |
|---|---|---|
| What causes it | Credit card, mortgage, credit and loan applications; FCAC adds some rental and some employment applications | Requesting your own report, a company you already have an account with updating its records, and pre-approved or promotional offers |
| Who sees it | Anyone who views your report | Only you, on your own version of the report |
| Effect on your score | Can lower it; Equifax says a hard inquiry usually will | None |
| How long it shows | 3 years at Equifax and 6 years at TransUnion, according to FCAC | The sources don’t give a period |
Sources differ on rental and job checks. FCAC lists some rental and some employment applications as hard inquiries, while TransUnion lists tenancy application checks and employment checks by prospective employers among the inquiries that don’t affect your score. TransUnion also says checking your own credit doesn’t affect your score.
More on asking for a higher limit and switching cards at the same bank.
How long does an inquiry stay on your credit report?
The sources give two periods:
- FCAC says lenders’ inquiries stay 3 years with Equifax and 6 years with TransUnion.
- Equifax Canada says hard inquiries can stay on an Equifax report for 3 years, or up to 36 months.
- FCAC’s report basics page says a report shows inquiries from lenders in the last 3 years.
So an Equifax report shows a hard inquiry for about 3 years, and FCAC says TransUnion keeps them for 6. These pages say how long an inquiry stays listed, but none of them says how long it keeps affecting your score. Equifax says recent hard inquiries tell a lender you were recently looking for new credit.
How much does one inquiry lower a score?
No Canadian bureau or FCAC page gives a number of points. TransUnion says inquiries have only a small impact on your score. A separate concern is several applications close together: FCAC says too many inquiries close together may make lenders think you urgently need credit or are spending beyond your means, and it suggests not sending several applications at once. The factors behind a score are on how credit scores work.
Shopping for a car loan or mortgage works differently. FCAC says that when shopping for a car loan or mortgage, quotes from different lenders within a 2-week period count as 1 inquiry, and TransUnion says most scoring models avoid lowering your score for that kind of rate shopping. Equifax gives a range of 14 to 45 days depending on the scoring model and says this exception does not apply to credit cards.
Can you check whether you qualify without a hard inquiry?
Some issuers offer an eligibility or pre-approval check before you apply, for example:
- American Express Canada says, for some of its cards, that you can see if you’ll be approved before you apply, with no impact to your credit score.
- Capital One Canada says you can find out if you’ll be pre-approved with no risk to your credit score. Capital One says a pre-approval leads to approval except in limited circumstances.
Scotiabank says the check behind a pre-approved offer is a soft one, but some lenders may do a hard inquiry when you accept the offer. In most provinces, signing a credit application is your consent to a credit check, so look for the step where the issuer asks for that consent. Applying is covered on credit card approval.
What if you see an inquiry you don’t recognise?
FCAC says accounts you don’t recognise might mean someone applied for credit in your name, and credit monitoring can alert you to a new inquiry. If you find possible fraud, FCAC says to contact the lender, and to contact both Equifax and TransUnion to put a fraud alert on your report.
Related
More guides are on the credit card basics page.