Too many hard inquiries on a person's credit file will show the person's been desperately shopping around for credit they probably don't qualify for. That will make other potential lenders more wary.

Technically, too many hard inquiries on a credit file will also reduce the FICO score but only by a small amount, and only for the first year. However, they will stay on your file for at least 3 years with Equifax and 6 years with TransUnion. The chief harm done will be the first reason. If a mortgagee sees you've made 10 other applications in the past month, they'll look at you a lot more pessimistically. A credit score is frequently only one of the factors lenders use in assessment.

Hard inquiries were originally created for the purpose of discouraging consumers from shopping for too much credit. Not a bad idea. However, due to lax enforcement, as often as not, they are used by collection agencies and debt buyers as an enforcement tool to collect on bad debts.

Soft inquiries are used for account updates and inquiries by creditors and collection agencies. They are also used in connection with insurance underwriting, tenancy and employment applications. These inquiries are generally in a more summary form and contain only as much information as the client is willing to pay the bureau for. They may also feature additional software like "Gemini" to yield a fraud score to potential creditors. Again, all information is available to almost anyone. It just boils down to how much they're willing to pay. Irregarless of their form, soft inquiries aren't displayed to anyone except the requestor and the subject of the report. Thus they have no effect on your score or profile with other lenders.

It should also be noted that almost any government agency can pull your credit file as part of an investigation, and it will not appear under either category.

Thank you for your advice! I'm sorry if I didn't make this clear earlier (for the 1st post to my message), but we are hoping to pay off at least 80% of our debt before we even start looking for a mortgage or look at houses. I realize that this could be a few years in the future too. We just like to plan and see where we are sitting so we can look forward to the future and start to plan as much as we can.

As well, I was wondering if anyone could answer this: how does a credit check (by a bank/financial institution) affect your credit?

Quick advice is this:
make a list of mortgage lenders in your area...

go to each one and tell them your story with the understanding that you're not applying for credit, but that you are just gathering information..:
Don't let them do a credit bureau pull on you just yet.. just scope them out with your current information...

More often than not, the creditors want to know that you're a solid credit risk, have been at your job for a while, have money to cover a down payment, and ability to repay the mortgage... after that it just depends on the amount etc...

Unless you have a fairly good source of income, re-establishing your credit rating might not solve everything. If you go out and buy a house you can't afford, you'll only end up further in the hole. You have a lot of things to take care of before you can even think of buying a home.

Hello,

My husband and I just moved to New Brunswick from Ontario. We were hit hard by the recession and neither of us worked for at least one year due to layoff's. We were both on EI and actively looking for work, but EI only gave us enough to barely live off of, and credit cards/line of credit were our only hope.

Anyways, we have racked up debt to the tune of $50,000+ (and student loans as well) and have just recently both obtained jobs. We have a budget together in order to responsibly pay back our debt and it looks like we may be out of it in 3-4 years or so. We are no longer adding to our debt, just paying it off.

My husband has the credit cards in his name and one line of credit as well. I share one line of credit with him too but I have no other credit. Obviously in our situation no one wants to give me a credit card (and rightly so), but I want to build up credit so when we go for a mortgage, I can actually help obtain one.

Is there any advice you could give me regarding this situation? Any resources or venues for credit that might help (only for credit rating)? I was also wondering if you think we would be able to get a mortgage in the next few years in our situation?

Thank you for any advice you can send our way!