Effects On CIBIL Score After Inquiries: Know It All

  • Updated on: 5 Jul 2024
  • Published on: 4 Jul 2024
Effects On CIBIL Score After Inquiries: Know It All

Worried whether your CIBIL score reduces every time you check it or the lenders check it? It’s a common question since you may be keeping a tab on your score from time to time to assess your creditworthiness. 

Apart from you, banks, NBFCs and other financial institutions may also be running a check if you’re applying for a personal loan, credit card or any other line of credit. Thankfully, whether it affects your score or not depends on the type of inquiry on your credit report. 

Know the different types of inquiries, their effects and more.

Effect of Inquiries on CIBIL Score

Does the CIBIL score get affected after checking? This query may often pop up in your mind. But before you know this, understand what an inquiry means. A credit inquiry is when lenders, banks and other entities conduct a check on your credit score. The checks that you run are also considered credit inquiries. Every time your credit score is accessed, it’s reported in your credit report. 

There are two types of inquiries – hard and soft inquiries. Multiple hard inquiries may negatively impact your score. On the other hand, soft inquiries don’t have any negative impact.

Understanding Hard Inquiries

The inquiries that financial institutions like banks, NBFCs and other institutions run are known as hard inquiries. The following pointers answer your question, ‘Does CIBIL score get affected after checking?’ It depends on who runs a credit check.

Here’s what you need to know:

  • Financial institutions run a hard inquiry to assess your repayment capacity when you apply for a line of credit
  • You need to provide authorisation for these types of inquiries and they last on your credit report for around 2 years
  • Multiple hard inquiries within a short period of time can negatively impact your CIBIL score as it shows that you rely heavily on credit

Understand what triggers these types of inquiries:

  • Applications for business or personal credit cards
  • Application for a new credit card in a span of 2 years
  • Applications for various types of loans such as home, personal, car and other loans
  • Application for an enhancement in credit limit
  • Application for balance transfer for loans or credit cards

Understanding Soft Inquiries

These inquiries are when you check your score or when some institutions check it to assess your eligibility for financial products. Here are some key points to know:

  • These types of inquiries don’t get registered on your credit report, so they don’t impact your CIBIL score
  • Only you can view soft inquiries on your credit report
  • Financial institutions don’t need your authorisation for soft inquiries
  • Soft inquiries by issuers can sometimes reduce your score by negligible points, which doesn’t have significant consequences

As mentioned, the type of inquiry decides whether or not your score is impacted. The next time you stress on this thought, ‘Does CIBIL score get affected after checking,’ assess the type of check being initiated.

Here’s when soft inquiries occur:

  • When you run a check on your credit score
  • In case you’re pre-qualified for credit cards
  • When you’re pre-qualified for insurance offers
  • In case your employee wishes to verify your financial background

Ways to Reduce Hard Inquiries

As you can see, multiple hard inquiries can harm your CIBIL score. Here are some tips to reduce the instances:

  • Before applying for new credit, review your credit report and score to ensure you qualify
  • Research well and apply for a credit card that meets your financial needs to prevent unnecessary hard inquiries
  • Stay away from applying for multiple credit cards in a short time span
  • Consider sending an application for prequalification to assess your eligibility without impacting your score
  • Review your credit report on a regular basis to catch any errors and get them rectified by credit bureaus as soon as possible
  • Dispute the inquiry with the creditor or the lender in case you believe it’s fraudulent or you didn’t authorise it

If you want instant funds but have a lower score, Fibe offers a quick and easy solution to get funds. You can apply for an Instant Personal Loan and manage all your planned or unforeseen financial needs without any hassle. 

We use an alternate scoring mechanism to check your creditworthiness, allowing you to get funds affordably even with a lower CIBIL score. Download the Fibe App or apply on the website today.

FAQs on Whether Your CIBIL Score Reduces Every Time You Check It

Do multiple inquiries affect your CIBIL score?

Yes, a high number of hard inquiries within a short time span can impact your CIBIL score. This is because it reflects that your finances are not stable. More inquiries show that you may have applied for a loan multiple times and you have high dependence on credit.

Also, if you’re wondering whether your CIBIL score reduces every time you check it, you don’t need to worry, as soft inquiries don’t get registered on your credit report.

Does multiple bank accounts affect CIBIL score?

No, the number of bank accounts you have doesn’t directly influence your CIBIL score. 

How much does the CIBIL score decrease with each inquiry?

A hard inquiry can lead to a drop of 0 to 5 points in your CIBIL score. But there’s no need to stress by thinking whether or not your CIBIL score reduces every time you check it. It won’t impact much, as this check is considered a soft inquiry.

 Share

Our top picks

Can Millennial Stress be Resolved by Financial Wellness?
Finance | 3 mins read
How Organisations Can Measure the Impact of Financial Wellness Programs
Finance | 3 mins read
How Can HR help Overcome Staffing Challenges in the Digital Age?
Corporate | 3 mins read
5 Signs of A Good HR Function
Corporate | 3 mins read