What constitutes a "hard inquiry" on a credit report?

A hard inquiry on a credit report occurs when a lender or financial institution evaluates a borrower’s credit history in response to a credit application. This type of inquiry is initiated when a borrower formally applies for a loan or credit card and the lender checks their credit report to assess the risk of lending. Hard inquiries typically have a temporary negative impact on credit scores, as they suggest that the borrower may be seeking new credit.

In contrast, the other options describe situations that do not constitute a hard inquiry. A monthly review by a credit bureau is not tied to an individual application and therefore does not impact the credit score. An automatic check conducted by a financial institution may refer to a background check for pre-approval but is generally not a hard inquiry since it may not involve a formal application by the borrower. Lastly, a soft check is a type of credit inquiry that does not affect credit scores and is often used for background checks or pre-qualifying purposes. Thus, the essence of what distinguishes a hard inquiry is its connection to a specific application for credit, which directly links to the borrowing process.