Current Affairs · Banking and Credit Scoring
In modern credit scoring models, which of the following accurately describes the comparative impact of 'Hard Inquiries' versus 'Soft Inquiries' on a consumer's credit score over a twelve-month observation window?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Hard inquiries are only generated for secured loans, while soft inquiries apply to unsecured loans.
- 2Both hard and soft inquiries are visible to all lenders and reduce the credit score by 5 points per inquiry.
- 3Hard inquiries are triggered by lender reviews for new applications and cause a temporary dip in the score, while soft inquiries do not affect the score.✓
- 4Hard inquiries stay for 24 months but affect scores for 6 months, whereas soft inquiries permanently lower the score if exceeding 10 per year.
Correct answer
Hard inquiries are triggered by lender reviews for new applications and cause a temporary dip in the score, while soft inquiries do not affect the score.
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