Your credit report is often viewed by a number of agencies and companies; some of these views are known as hard pulls and soft pulls. Also known as inquiries, when a company or agency “pulls” information from your report, they are trying to obtain information that can help them make a decision regarding an interest that they have in you.
But hard pulls and soft pulls don’t stop at just providing information to interested parties; they also have a very direct effect on your credit report and score. So to give you a better idea of what these actions entail, let’s look more closely at their meanings.
Soft Pulls
Soft pulls are inquiries made to your credit report that have no adverse effect on your score. Many times, these types of inquiries occur without your knowing. For example, a company may conduct this type of inquiry if they want to see if you qualify for a pre-approved credit card or loan. Also, some employers may conduct the soft pull as a part of their background check. However, no one else looking at your report can see these inquiries and it doesn’t lower your score.
Hard Pulls
Hard pulls are considered the “bad guys” of the inquiries. These types of inquiries occur when a lender looks at your credit to determine whether you should receive a loan or credit card. The difference between these and the soft pulls, however, is that the former stays on your credit report for up to 6 months and actually lowers your credit score by about 5 points. This may not seem like a huge penalty, but if you seriously apply for too many loans or credit cards, your score can lower significantly.
It’s important to know the difference between hard pulls and soft pulls, as well as the impact both have on your credit report and score. By knowing their impacts, you can make informed choices that will positively affect your use of credit.