What are the potential impacts of credit inquiries, such as applying for loans or credit cards, on a person's credit score?

Credit inquiries can have an impact on a person's credit score, although the extent of the impact can depend on various factors, such as the number and frequency of inquiries, and the type of inquiry.

There are two types of credit inquiries: hard inquiries and soft inquiries. Hard inquiries occur when a person applies for credit, such as a loan or credit card. These inquiries are initiated by the borrower, and they can remain on the credit report for up to two years. Hard inquiries can have a negative impact on the credit score, particularly if there are multiple inquiries within a short period of time, as it may indicate that the borrower is taking on too much debt.

On the other hand, soft inquiries occur when a person checks their own credit report or when a lender checks a person's credit as part of a preapproval process. These inquiries do not have any impact on the credit score.

It's worth noting that credit scoring models typically take into account that a person may shop around for the best loan or credit card rates, and they may allow for multiple inquiries within a short period of time to be treated as a single inquiry. This is often referred to as a "rate shopping" or "inquiry deduplication" period, which may vary depending on the credit scoring model.

In general, if a person is considering applying for credit, it's a good idea to do so strategically and to limit the number of hard inquiries as much as possible. This can help to minimize the potential negative impact on the credit score.