Soft vs. Hard Credit Check: What’s the Difference?

Your credit score has a profound impact on your entire financial life, even if you only check it a few times a year. You need credit when you take out large loans, like for a car or home. But if you apply for too much credit, you can end up damaging your score. Understanding the different ways that potential lenders and others check your credit will help you keep your score the best it can be.

When you apply for a credit card, loan, mortgage or even for a new job or apartment, the lender, employer or landlord might check your credit score. There are two different ways your credit can be checked — hard and soft credit inquiries — each of which impacts your score differently. Learn the difference between hard and soft credit inquiries to ensure you get the highest credit score.

What Is a Soft Inquiry?

A soft inquiry, sometimes called a soft pull, is a review of your credit file. If you request a copy of your credit report, or if a new employer is conducting a background check that includes a credit report, it would be a soft inquiry on your credit report. A soft inquiry does not impact your personal credit score because it does not indicate that you are seeking additional credit. It simply indicates that someone is checking to see what your current credit situation is.

Examples of Soft Inquiries

Soft inquiries are made by organizations that are not necessarily looking to provide you with more credit at this time. Soft inquiries include:

• A request you make for a copy of your credit report
• A background check for employment or another reason
• An offer to be pre-qualified for a credit card
• An offer to be pre-qualified for a mortgage or other loan

Must-Read: 9 Ways to Raise Your Credit Score This Year

What Is a Hard Inquiry?

A hard inquiry, or hard pull, is used by those entities that are trying to determine whether they should grant you additional credit. Because it is an indication that you are looking to borrow more money, a hard inquiry on your credit report will decrease your score slightly. A hard inquiry will stay on your credit report for two years, but your score will only be impacted by hard inquiries in the past 12 months.

Examples of Hard Inquiries

A hard inquiry usually requires that you give the lender permission to check your credit. A hard inquiry will typically be pulled if you complete an application for:

• A mortgage
• A credit card
• An auto loan
• A student loan
• A personal loan
• An apartment

Note that checking to see if you can be pre-qualified for a credit card or loan will result in a soft inquiry, but actually applying for the credit will cause the lender to pull a hard inquiry.

Get the Answer: How Long Do Hard Inquiries Stay on Your Credit Report?

Soft vs. Hard Inquiries: Why the Difference Matters

A soft inquiry should not result in any change to your credit score. A hard inquiry will drop your score by a few points, but multiple hard inquiries within a short period of time by mortgage, auto loan or student loan lenders will be viewed as a single inquiry, or completely ignored, depending on the time of inquiry prior to scoring, since they are usually the result of shopping around for rates.

Understanding the difference between soft and hard credit inquiries can help you maintain the best credit score you can. And a strong credit score can help you get the credit you need for large purchases you might want to make down the road.

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