What type of inquiries may have less impact on credit scores?

• A. Hard inquiries
• B. Soft inquiries
• C. Negative inquiries
• D. Active inquiries

Answer: (B)

Soft inquiries have less impact on credit scores because they are typically made for non-lending purposes, such as pre-approval checks or personal credit reviews. Unlike hard inquiries, which occur when a lender checks your credit for a loan application and can signal a higher risk to creditors, soft inquiries do not reflect any intention to engage in new debt. They are essentially surface-level checks that allow individuals or companies to assess creditworthiness without affecting the credit score.

By nature, soft inquiries are often linked to things like background checks or promotional offers, and they do not impact a consumer's credit scoring model. Therefore, they are designed to allow consumers to understand their credit situation without the risk of lowering their scores. This makes them a useful tool for monitoring one's own credit or assessing financial options without the pressure of a formal credit assessment.