What is a Credit Report Enquiry and Does it Affect My Score?
Learn the difference between hard and soft enquiries and how they can impact your creditworthiness in South Africa.
Have you ever noticed a section on your credit report labeled "Enquiries"? This log shows which companies have recently looked at your credit information. While it may seem minor, this section can influence a lender's decision and even your credit score.
There are two main types of enquiries: hard enquiries and soft enquiries.
Hard Enquiries (The Ones That Matter)
A hard enquiry, also known as a "hard pull," occurs when a lender or financial institution checks your credit report as part of a formal application for new credit.
- When it happens: When you apply for a home loan, vehicle finance, personal loan, credit card, store account, or request a credit limit increase.
- Requires your consent: Under the National Credit Act, a lender must have your permission to perform a hard pull on your credit report. You usually give this consent when you sign an application form.
- Visible to other lenders: Hard enquiries are visible to any other company that checks your report.
- Impact on your credit score: A hard enquiry can cause a small, temporary dip in your credit score (usually for a few months). Why? Because applying for new credit can be a sign of financial risk. Many hard enquiries in a short period of time are a significant red flag for lenders, as it can suggest you are in financial distress or trying to take on more debt than you can handle.
It's wise to be strategic about applying for credit. Shop around for rates, but only submit formal applications when you are serious about moving forward.
Soft Enquiries (The Ones That Don't)
A soft enquiry, or "soft pull," occurs when your credit report is checked for a reason other than a direct application for new credit.
- When it happens:
- When you check your own credit report (e.g., getting your free annual report).
- When a current creditor performs a routine account review on your profile.
- When a company gives you a "pre-approved" credit offer.
- When a potential landlord or employer checks your credit (with your permission).
- Does NOT require your consent in all cases: For example, existing creditors can review your file periodically.
- Only visible to you: Soft enquiries are recorded on your report, but they are not visible to other lenders.
- Impact on your credit score: A soft enquiry has zero impact on your credit score. You can check your own credit report as often as you like without any fear of it lowering your score.
Reviewing Your Enquiry History
When you get your credit report, take a moment to look at the enquiry section.
- Do you recognize all the companies that have performed hard pulls?
- If you see a hard enquiry from a company you don't recognize or for credit you never applied for, it could be a sign of identity theft or fraud. In this case, you should immediately contact the credit bureau to dispute the enquiry and place a fraud alert on your profile.
Understanding the difference between hard and soft enquiries empowers you to manage your credit-seeking behavior wisely and protect yourself from fraud.
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