Credit checks: What you need to know and how they can impact your credit score

What's the difference between a hard pull and a soft pull?

Oscar Gonzalez Former staff reporter
Oscar Gonzalez is a Texas native who covered video games, conspiracy theories, misinformation and cryptocurrency.
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Oscar Gonzalez
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Credit Score

Credit inquiries could hurt your score.

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You need a good credit score for everything from renting an apartment to buying a car. But when it comes time for a prospective landlord or car salesperson to check your credit, that check -- in and of itself -- can impact your score. 

Here's an overview of the different kinds of credit checks -- whether initiated by an individual or a company  -- can affect your credit score. 

What is a credit inquiry?

Your credit report contains a list of parties that have made inquiries about your data. These are typically financial institutions that are looking at your credit history to determine if it will lend you money. But other entities can make inquiries including potential employers, realty companies, utilities, insurance agencies and even government institutions. They stay on the report for up to two years.

The inquiry section of your credit report is divided into two subsections:  hard and soft inquiries, colloquially known as "pulls."  

See Also: How to read your credit report

What is a hard pull?

When an entity contacts the credit reporting agencies -- Equifax , Experian or TransUnion -- and requests a person's credit report with their consent, that's known as a hard pull. This kind of inquiry can have a negative impact on your credit score. But if a potential creditor asks for one, there's no need to panic.

"It is unlikely that a single hard inquiry will risk your chances of getting approved for a new credit card or loan," said Ken Lin, Credit Karma founder and CEO. "Any damage from a single hard inquiry on your credit score will likely decrease or disappear before the inquiry eventually drops off your credit report."

A hard pull can decrease your credit score by up to 10 points. According to FICO, a major credit scoring service, hard pulls made within the past 12 months can influence your score.

Why do hard pulls affect a credit score? 

Inquiries about your credit history tend to signal some kind of financial event, where you're in need of money. 

"Depending on your unique credit history, hard inquiries could indicate different things to different lenders," an Equifax representative told CNET. "Recent hard inquiries on your credit report tell a lender that you are currently shopping for new credit."

Creditors look at your credit report to understand your financial situation. If you've been applying for loans from multiple lenders, it could be a sign that you're desperate for money. And some lenders see risk in that. 

To maintain a consistent score, you'll need to manage your hard pulls. That means spacing requests out rather than making multiple applications simultaneously. 

"A best practice is to do your research ahead of time," Equifax said. "Learn whether the type of credit you're applying for can have its hard inquiries treated as a single inquiry. Check your credit report before getting quotes to understand what information is reported in your credit scores and reports. The more you know about your credit standing and how many hard inquiries you currently have, the more accurately you can evaluate whether another hard inquiry will impact your credit portfolio."

What is a soft pull? 

A soft inquiry involves the same type of information as a hard pull, but it's not tied to a particular application -- and, most importantly, it's done without your explicit consent. Companies may review some parts of your financial history when they see fit. Some examples of when this may happen are pre-approved credit offers -- known as promotional inquiries -- or when your bank checks to see if they will increase your credit. Soft pulls also occur when you review your info via a credit monitoring service. 

Soft pulls have no effect on your credit score and lenders disregard them because they're done without your permission. 

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