Hard Credit Checks vs. Soft Credit Checks

Have you ever gotten a credit card offer in the mail? Applied for a loan? Picked up a new credit card? Rented an apartment? 

To make that happen, someone runs an inquiry on your credit. And — if you’re like most modern adults — you’ve had dozens or even hundreds of credit checks run on your history. 

But what does that really mean? What’s the difference between a hard credit inquiry and a soft credit inquiry? And what should you know to keep your credit healthy?  

What is a credit inquiry? 

A credit inquiry is a request for information about your credit history. These requests are directed to the credit bureaus, which track consumer credit histories. You can inquire about your own credit, or a third party can seek a credit check on you. 

Lenders typically run a credit inquiry on you if you’re applying for new credit or looking to increase the amount of credit you have. In addition, employers, insurers, and utility companies may request a credit inquiry as one data point in your application. 

Credit reports aren’t considered public information, however, and their privacy is protected by the Fair Credit Reporting Act. So, you can’t check on your friends’ finances or be subjected to unauthorized access to your history. By law, anyone wishing to view your credit history must have a permissible purpose. 

What is a hard credit inquiry? 

A hard credit inquiry might also be called a hard credit check or a hard credit pull. These requests only happen when you actively apply for credit or specifically authorize a hard credit inquiry. 

A hard credit check typically occurs when you’re actively seeking new or additional credit, as in the following situations: 

• You apply for a new mortgage, a second mortgage, or a refinance. 

• You apply for a new student loan. 

• You apply for a car loan. 

• You apply for a new credit card or line of credit. 

• You request a credit limit increase on your card or line of credit. 

What is a soft credit inquiry? 

A soft credit inquiry might also be called a soft credit check or a soft credit pull. These requests do not require your consent and sometimes occur without you even being aware of them. 

A soft credit check typically occurs in the following situations: 

• You check your own credit score. 

• You request prequalification for financing. 

• Your current creditors check in on your credit history. 

• A credit card company confirms that you qualify for a preapproval offer they want to advertise to you. 

• Your insurance company wants to calculate your premium for the coming term. 

• You apply to rent an apartment. 

• You sign up with a new utility service (electric, gas, phone, etc.). 

• You apply for a new job. 

Not sure whether an inquiry you authorize will result in a hard or soft credit check? Just ask. The answer will give you valuable information about how the inquiry will impact your credit score. 

How credit inquiries affect your credit score 

One of the most important distinctions between hard and soft credit checks is how they influence your credit. The differences are significant. And understanding the implications of each type of credit inquiry can help you make smart choices about your credit health: 

Hard credit inquiries 

Hard inquiries appear on your credit history report and typically stay there for two years. And they do affect your credit score. 

A hard credit check can reduce your credit score up to five points in its immediate aftermath. The impact lessens over time — ending within a year. 

While five points is a relatively small change in your score, several hard credit inquiries can create a compound effect. Repeatedly applying for new credit can cost you points again and again. To lenders, it appears that you’re desperate for financing. And that perception can make you look like a big financial risk to lenders. 

However, this is a loophole when it comes to repeated hits to your credit score — the rate shopping exception. Rate shopping considers a situation in which you apply repeatedly for the same type of credit — say a mortgage — within a specific window of time. (That window is 45 days for the calculation of your FICO® Score and 14 days for your VantageScore.) 

If you engage in rate shopping while comparing lenders’ offers, those separate hard inquiries are counted instead as a single inquiry. That way, you can apply for and compare terms from multiple lenders without worrying about taking a bit hit to your credit score. 

Soft credit inquiries 

Unlike a hard inquiry, a soft credit check does not impact your credit score in any way. You can have dozens or even hundreds of soft inquiries on your report with zero impact to your score. 

In fact, those soft credit inquiries are visible only to you when viewing your credit report. Any other person or business that views your report will see hard checks listed but not soft checks. You’ll be able to see your soft credit inquiries for about two years after they’re initiated. 

What you need to know about credit inquiries 

Now that you know the mechanics of credit inquiries and how they impact your credit, keep these key facts in mind: 

1. Credit inquiries aren’t the most impactful factors in your credit score. 

At most, a single hard credit check costs you five points. And, while repeated credit applications can add up, other factors predominantly drive the quality of your FICO Score: 

• Payment history accounts for 35%. 

• Credit utilization accounts for 30%. 

• Length of credit history accounts for 15%. 

• Credit mix accounts for 10%. 

• New credit (which considers hard credit checks) accounts for 10%. 

2. Limit hard credit checks whenever possible. 

Remember: Repeatedly applying for new credit — when the rate shopping exception isn’t relevant — can make you look risky to lenders. And it can cause your credit score to drop. 

So, consider applying for credit only when you truly need it. Avoid applying to every credit card offer that comes your way or getting a series of separate, small loans instead of a single larger one. 

3. Avoid credit applications before major financing. 

Are you considering a big loan soon? Maybe you’re looking to buy a house, refinance, or finance a small business. 

To help maximize your credit score, avoid unnecessary hard credit checks in the months leading up to your application for major financing. 

4. Confine rate shopping to a tight time window. 

If you plan to apply for one specific type of financing — a mortgage, a student loan, a car loan, a personal loan, etc. — prepare to do your comparison shopping quickly. 

Remember the rate shopping exception, which counts multiple applications for a single type of financing as just one hard credit check. You’ll need to stay within a 45-day window for your FICO® score and just 14 days for VantageScore. Beyond that, a new credit application will count as a separate hard credit check. 

5. Watch for unfamiliar hard credit inquiries. 

Hard credit checks are initiated when you apply for financing or authorize a business to do a check on you. So, the hard inquiries that appear on your credit report should all look familiar to you. 

If you see an unknown lender listed, it’s possible that an alternate name appears for an inquiry you authorized. But it might also be an indication that someone is applying for credit in your name — identity theft. 

If you suspect fraud, initiate the dispute process through the credit bureau’s website right away. 

6. Go ahead and check your credit. 

Looking up your own credit score counts as a soft inquiry. So, you can check it as often as you want with zero negative effect. 

In fact, it’s a good idea to check your score often! You’ll know where you stand, see how your score changes over time, and be prepared if you’re thinking of getting a new loan. 

For most people, credit inquiries are a basic fact of life. Knowing how they work offers great insight into your credit history and score. Then, you can take proactive steps to keep your finances healthy and strong.