Soft vs. Hard Credit Inquiry: What They Are and How They Differ

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You’ve probably heard that too many credit inquiries can drag down your credit score, and that’s true… in some cases. All credit inquiries aren’t the same. There are two types: soft and hard inquiries. Knowing the differences between them can be important for your financial health, whether you’re looking to repair your credit or just shop lenders.

What is a credit inquiry?

A credit inquiry is a formal request for your credit history. Also referred to as a “credit check” or “credit pull,” they provide a snapshot of your financial health and include your debt, bill payment history and other financial information. The requests must be made by a “legitimate company,” which typically means lenders or others who are evaluating what type of a credit risk you may be.

As we mentioned before, there are two distinct types of credit inquiries: hard and soft credit inquiries; the primary difference between a soft and a hard credit check is the impact on your credit score. Your credit score is a three-digit number that’s used by lenders to judge how much of a financial risk you may be. The most widely used credit scores are those generated by the Fair Isaac Corporation (FICO), and they range from 300 to 850 — the higher, the better.

There are numerous factors that go into calculating your credit score, and only some credit inquiries are a factor. A soft inquiry has no impact on your credit score, while hard inquiries can drag it down. The more hard inquiries in a short amount of time, the further down it will be dragged.

Here’s a closer look at the two types of credit inquiries.

What is a soft credit check?

A soft credit check won’t impact your credit score at all. It occurs when someone (including you) wants to get the general pulse of your credit health, but it’s not being used to make a lending decision. In some cases, you may not even be aware when someone performs a soft check on your credit.

Soft credit inquiries produce the same information as hard credit inquiries, including your bill payment history, your debt and if you’ve filed for bankruptcy. Some common scenarios in which soft credit checks are performed include the following:

  • When you check your own credit: It’s a good idea to check your credit regularly to ensure there are no errors. You can request a copy of your credit report free once a year from each of the three major credit bureaus (Equifax, Experian and TransUnion). While it will trigger a soft credit inquiry, this won’t affect your credit score at all.
  • When credit card companies and lenders are looking to send out offers in the mail: You know those pre-approval offers you get in the mail from credit card companies? They probably did a soft credit check on you to determine if you may be a good candidate for those offers. They want to screen out those who wouldn’t qualify for their offers if they did apply. Those pulls won’t affect your credit score, unless you apply for an offer, at which point a hard credit check would be performed.
  • When a potential employer wants to evaluate your credit history: While laws vary by state, some potential employers may pull your credit report as part of the job interview process. They’re required by law to notify you first, and in some cases, they may only receive a modified version of your credit report. In no case will employer inquiries affect your credit score.

What is a hard credit check?

Hard credit checks, on the other hand, can affect your credit score. They happen only when you:

  • Seek new credit: If you apply for a credit card or loan product, the lender will perform a hard credit check to determine your eligibility.
  • When you apply to increase your credit limit: Increasing the credit limit on your credit card may allow you to afford a needed expense and lower your credit utilization ratio.

You will always be aware of hard credit checks, unless someone steals your identity and applies for credit in your name, which is why regularly checking your own credit report is important.

Hard credit checks produce the same information as soft credit checks, but they differ in that they can negatively impact your credit score. According to FICO, people with more hard credit inquiries are a greater risk for lenders, and, no matter how good those inquiries find your credit to be, they can drag down your score. Inquiries remain on your credit report for up to two years.

Rate shopping exceptions for hard credit checks

There is an exception when you’re rate shopping for a student loan, mortgage or personal loan. While lenders will do a hard inquiry to determine the rates and terms they’ll offer you, those inquiries won't show up on your report for 30 days, so they won’t affect your ability to secure the credit.

Also, as long as all of the inquiries are performed within a certain amount of time (14 to 45 days, depending on which credit scoring formula a lender uses) and for the same amount and same purpose, they’ll only show up as one single hard inquiry thereafter.

How much do hard inquiries affect your credit score?

It’s also important to note that even if you do have numerous hard credit checks on your report, the impact on your credit score is typically minimal in the overall calculation of your credit score.

According to FICO, one hard credit inquiry typically results in a less than a five-point reduction in one’s FICO score, and the impact lessens over time. Things like how timely you are when it comes to paying your bills and the amount of debt you owe affect your score much more significantly. Of course, those points can add up, so you should always limit hard credit inquiries as you’re able.

When you’ll get a hard vs. soft credit check

ScenarioSoft credit checkHard credit check
You check your credit scoreX
You apply for a student loan, personal loan or mortgageX
You apply for a credit card or request an increase in your spending limitX
You receive pre-qualified offers for credit cards or life insuranceX
A potential employer checks your credit historyX

There are also some situations in which an inquiry may be either hard or soft, such as when you apply for an apartment or car lease or sign up for service with a utility provider. Make sure you ask which type of inquiry will be pulled. In some cases, you may be able to have a soft one pulled instead of a hard one by providing an entity with a copy of your credit report that you obtain yourself instead of having them pull one.

A word of advice when exploring lenders

While limiting hard credit inquiries is advisable, that doesn’t mean you should be afraid to shop around when it comes to lenders. It’s always a good idea to explore your options to find the best deals possible. There are some things you can do to limit the impact of those inquiries too, including:

  • Shop efficiently: When you’re rate shopping, try to be efficient. Multiple soft inquiries in a short period of time (within 14 to 45 days of each other) won’t ding your credit very much, but if you drag those inquiries out over time, they may.
  • Know your limits: If you don’t think you’ll qualify for a credit card or loan, don’t apply. For example, if your credit is poor, you may be less likely to qualify for a loan with a traditional bank and may want to explore options with credit unions and other lenders. Know your own credit score and evaluate the terms and conditions for approval before applying.
  • Don’t be pulled in by promotional deals: While offers for discounts and other freebies just for applying for a credit card may be tempting, if it’s not a card you need or plan to use, then the impact of that credit inquiry on your credit score may not be worth it.

While the thought of credit inquiries make many shudder, the fact is they can be an important tool for institutions and consumers alike. Know the differences, limit hard inquiries when possible and always be aware of which ones are on your credit report.

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