Inquires

Inquiries occur anytime someone looks at your credit report. There are two types of inquiries:

• Soft inquiries: when you or someone else looks at your credit report for a purely informational reason, it counts as a soft inquiry. This might occur when you look at your own credit report or when credit card companies look at it to pre-approve you for a card. Soft inquiries do not impact your credit score. 
• Hard inquiries: when someone looks at your credit report because you are asking for money. Examples of this occurring include the bank looking at your report when you are asking for a home or car loan. Hard inquiries do impact your credit score. 

Lets look more closely at hard inquiries:

Optimally, you should limit your hard inquiries to 5 to 6, as each one takes about 5 points off of your credit score. Luckily, three things work in your favor:

• Inquiries only stay on your report for two years. 
• If you make multiple mortgage inquiries within four weeks it only counts as one inquiry. This means that when you are shopping around for the best home loan you should try to do it within the time span of four weeks. 
• If you make multiple car loan inquiries within two weeks it only counts as one inquiry. This means that when you are shopping around for the best car loan you should try to do it within the time span of two weeks.