Can a hard inquiry on one's credit affect their credit score?

A hard inquiry on a person's credit can indeed affect their credit score, and specifically, it can decrease the score. This type of inquiry occurs when a lender reviews an individual's credit report as part of their decision-making process for credit applications. While each hard inquiry may only have a small effect on the overall credit score, multiple inquiries can accumulate and lead to a more significant impact over time.

When consumers apply for several credit accounts in a short period, it may signal to lenders that they are experiencing financial distress, which can make them appear riskier. This perception can contribute to a lower credit score as it suggests that the individual is seeking to take on more debt than they may be capable of managing.

The other options do not accurately reflect the true nature of hard inquiries. They do not create a situation where credit scores might be positively impacted or are irrelevant to future loans; rather, their primary role is connected to the assessment and risk associated with extending credit. Therefore, recognizing that hard inquiries typically have a negative effect reinforces the importance of managing credit applications wisely and understanding their potential consequences on one's credit score.