Anyone who has ever checked their credit report may have come across two different types of credit inquiries -- soft pulls and hard pulls. While both types of credit checks come about when a third party requests access to your credit report, they each work differently. In fact, one type of credit inquiry can negatively impact your credit score.
When your credit score or credit report is pulled from one of the three credit bureaus -- TransUnion, Experian and Equifax -- it’s usually at the request of a lender you’ve applied to for credit. The lender will use this information to decide whether to grant you a loan and at what interest rate.
When a lender pulls your credit in this way, it’ll result in a hard inquiry that could drop your credit score slightly. But there are other situations where pulling your credit -- whether done by a lender or yourself -- will only result in a soft inquiry that won’t affect your credit score.
We’ll explain the differences between a soft and hard inquiry on your credit report, the situations where you’ll encounter each one, and how each of them impacts your credit score.
What is a soft credit check?
A soft inquiry, or soft pull, on your credit report typically happens when you, another person or a company checks your credit score without a formal credit application. If an employer is checking your credit as part of a background check, or if you’re interested in learning your credit score, these actions will result in a soft pull.
You may also see a soft pull if a company has preselected or preapproved you for a credit card -- yes, even without your permission. Fortunately, soft inquiries don’t affect your credit score, and they’ll disappear from your report after one to two years.
The good news about soft pulls is, only you can see them on your credit reports.
Examples of soft credit checks
Remember that a soft pull on your credit doesn’t necessarily mean you are applying for a loan. Examples of instances where a soft credit pull is used include:
- Background checks: A soft pull can take place when a third party runs a background check on you.
- Credit limit increase: In some cases, a bank or lender you already do business with may do a soft pull to check if you’re eligible for a higher credit limit.
- Employer credit checks: An employer can ask to see a modified version of your credit reports before they hire you.
- Personal credit checks: You’ll see a soft pull on your credit reports any time you check your own credit score.
- Preapproved credit offers: Banks and lenders use soft pulls to find potential borrowers for their credit products.
- Promotional credit checks: If you took steps to “check your rate” or apply for preapproval for a financial product, this results in a soft pull.
What is a hard credit check?
A hard inquiry on your credit report usually happens when your report is pulled due to an application to borrow money. Whether it’s a car loan, mortgage or credit card, you’ll need to undergo a hard credit check during the approval process. Luckily, you’ll need to give permission in order for entities to run a hard credit check.
If you’re renting an apartment, your potential landlord may run a hard credit check, though again, you’ll need to give permission. Also note that, unlike with soft checks, lenders can see other hard pulls on your credit report when they check your credit.
Examples of hard credit checks
Remember that a hard pull on your credit requires your approval, and it takes place when you’re formally applying for a loan or other credit product. Examples include:
- Applying for an apartment: If you fill out an application to rent an apartment, your landlord could do a hard pull to check your creditworthiness.
- Cellphone service: You might also see a hard pull on your credit when you apply for cellphone service with a monthly contract.
- Loan applications: Applying for a mortgage, an auto loan, a personal loan or a credit card will typically result in a hard pull on your credit.
- Loan refinancing: If you already have a loan, but you apply for refinancing, the lender will do a hard pull on your credit to determine your creditworthiness.
- Private student loans: While most federal student loans do not require a credit check, private student loans usually do.
Hard inquiries vs. soft inquiries
As we mentioned already, hard inquiries have the potential to impact your credit score in the short-term. Meanwhile, a soft pull on your credit will have no impact at all.
The chart below compares these two types of credit inquiries side by side.
|Can impact your credit score
|Never impacts your credit score
|Requires your permission
|No permission required
|Takes place when you apply for financing
|Takes place when someone wants to verify your credit history
|Visible to you and others that check your credit reports
|Only visible to you on your credit reports
How much does a hard inquiry affect your credit score?
Because multiple requests for credit in a short amount of time can indicate a risky borrower, hard credit inquiries may negatively affect your credit. Hard credit inquiries will generally lower your score by five points or less, but this can vary. They should impact your score for only about a year, according to credit bureau Equifax. When it comes to the FICO scoring model, hard credit inquiries affect the “new credit” category that accounts for 10% of your credit score.
That said, multiple hard inquiries for a home loan or auto loan over a short period of time may wind up counting as just one, so don’t let the fear of hard inquiries stop you from comparing rates for these loans across multiple lenders.
How long does a hard inquiry affect your credit score?
Hard credit pulls can stay on your credit report for up to two years but impact your score for only about a year.
This means the impact of too many hard inquiries may be relatively short-lived. However, that doesn’t mean you should go overboard or apply for new credit when you don’t need to.
How many hard inquiries should I have at a time?
While an excessive number of hard inquiries can be a red flag for lenders, there’s no definite limit for the maximum number of hard pulls you should have on your credit report at a time. And remember, this factor makes up only 10% of your FICO score.
That said, you’ll want to take hard pulls seriously and only give permission for one when you need to. If you apply for a bunch of credit cards or loans in a short period of time, these inquiries can negatively impact your score for a full year whether you actually qualified for financing or not.
Correction: An earlier version of this article was assisted by an AI engine and it mischaracterized aspects of how and when people can request credit reports. Those points were corrected. This version has been substantially updated by a staff writer.
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