A borrower applies for a mortgage, and their credit report shows several 'soft inquiries.' How do these types of inquiries typically affect the borrower's credit score?

Question: A borrower applies for a mortgage, and their credit report shows several 'soft inquiries.' How do these types of inquiries typically affect the borrower's credit score?

Answer options:

• Soft inquiries significantly lower the credit score due to repeated checks. ✅ Soft inquiries have no direct impact on a borrower's credit score.
• Soft inquiries indicate a higher risk to lenders, similar to hard inquiries.
• Soft inquiries always increase the credit score by demonstrating financial activity.

Correct answer: Soft inquiries have no direct impact on a borrower's credit score.

Explanation: Soft inquiries, which often occur when an individual checks their own credit or when a lender pre-screens for offers without an application, are visible only to the individual and do not impact the credit score. Hard inquiries, made when applying for credit, can slightly lower the score.