What are hard inquiries associated with?

Hard inquiries are associated with the process where a lender or other entity checks an individual’s credit report as part of the lending decision, typically when a consumer applies for credit. When a hard inquiry is made, it indicates that the individual is seeking new credit, which can be a signal of increased credit risk. As a result, hard inquiries can lead to a reduction in the credit score, often by a few points. This is because multiple inquiries in a short period can suggest that the consumer may be facing financial difficulties or is overly reliant on credit, which lenders view as a potential risk.

In contrast, the other options relate to situations or elements that do not pertain to the implications of hard inquiries on credit scores. For example, hard inquiries do affect the credit score, they do not confirm employment, nor do they verify income. Therefore, understanding that hard inquiries can reduce a credit score helps consumers be mindful when seeking new loans or credit cards, balancing their credit inquiries with their overall credit health.