What is one of the possible consequences of a hard inquiry on a credit report?

A hard inquiry on a credit report occurs when a lender or financial institution checks a consumer's credit as part of their decision-making process for credit applications, such as loans or credit cards. One of the possible consequences of this type of inquiry is a decrease in the consumer's credit score.

When a hard inquiry is made, the credit reporting agencies view this as a potential increase in credit risk. Therefore, having multiple hard inquiries in a short period can suggest that a consumer may be seeking to take on more debt, which can lead to lenders perceiving them as higher risk. This change is typically minor and temporary, but it is crucial for consumers to be aware of this impact on their credit scores, especially if they plan to apply for additional credit soon after a hard inquiry has occurred.

In contrast, increases in credit limits, approval of future credit applications, or exemptions from credit checks are not direct consequences of a hard inquiry and do not relate to the nature of how credit scoring works in conjunction with inquiries. Therefore, the identification of a decrease in the consumer's credit score stands out as the most accurate consequence of a hard inquiry.