What’s the Difference Between a Hard and Soft Credit Pull?
When applying for a loan or credit card, you’ll likely hear about soft and hard credit pulls (also known as hard and soft credit checks or hard and soft inquiries). While both types of inquiries provide a peek into your credit, the main difference between a hard and soft credit pull is that the former can cause your credit score to go down while the latter does not.
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What’s the difference between a hard and soft credit pull?
Credit pulls are when someone — even you — checks your credit. Lenders run hard checks when you officially apply for credit, which can cause your credit score to drop slightly. Soft checks, on the other hand, are for preapprovals or when you check your own credit, and they don’t affect your credit score.
Your credit reports are managed by the three credit bureaus — Equifax, Experian and TransUnion. Your credit history, such as on-time or late payments, is in your credit reports and visible to anyone conducting a credit pull on you.
| Soft credit pulls | Hard credit pulls |
|---|---|
| Performed by creditors to provide preapproved credit offers | Performed by creditors when you apply for a form of credit |
| Previous soft pulls are visible on your credit report to only you | Previous hard pulls may stay on your credit report for any creditor to see for up to two years |
| May be done without your prior approval | Must have your written approval |
| No impact to your credit score | Can cause your FICO Score to drop by up to five points |
What is a hard credit inquiry?
A hard inquiry is when a lender or other entity requests access to your credit reports before approving your application.
This can be triggered when you apply for a loan or credit card, or even when you sign a lease for a new apartment. For example, if you’re financing a car or applying for a mortgage, those lenders will perform a hard pull on your credit before providing final approval for your loan.
The following activities may require you to allow a hard credit pull:
- Credit card applications
- Any type of loan application (auto, mortgage, personal and student)
- Line of credit applications
- Rental applications (housing, car rentals)
- Credit limit increases
- Utility services
- New cell phone contracts
Hard inquiries are recorded on your credit reports and visible to anyone checking your credit. This is so lenders know that you may have more loans coming. In other words, it can demonstrate potential new debt that hasn’t popped up on your credit report yet.
Hard inquiries affect your credit score, but not by much. When it comes to your FICO Score (the most commonly used scoring model), a single inquiry will usually shave up to five points and stay on your credit report for two years. That could be detrimental if you also have a number of other negative items — such as late payments or big debt loads — that are weighing down your score. These are other factors that determine your credit score.
If you’re wanting to improve your credit score before applying for an important loan, such as a mortgage, you may want to limit hard pulls on your credit report.
What happens if you have too many hard inquiries?
If you have good or excellent credit, hard inquiries likely won’t bring down your credit score too much. However, if you have bad credit, they may have more influence on your overall credit health. Consider taking a break from applying for credit and instead focus on improving your score.
It can feel challenging to get your score up to a decent position. However, building your credit score is an important part of maintaining your financial health and can help you access things such as low interest rates and lines of credit.
Rate shopping exception
Numerous inquiries in a short time for the same type of loan probably means you’re rate shopping, so credit scores usually take this into account and your score shouldn’t be docked. This is called a rate shopping exception. Just be sure to shop fairly quickly because the exception is limited. You could have anywhere from 14 to 45 days to shop around for a home or auto loan and compare rates without your score dropping.
What is a soft credit inquiry?
A soft credit inquiry is when lenders look at your credit to gauge whether you’re preapproved for credit, when you check your own credit or when entities like insurance companies, medical providers and prospective employers check your credit before providing you with a rate quote or hiring you.
Soft inquiries are listed on your credit reports, but only you can see them. They also don’t affect your credit score.
What if my credit is pulled without permission?
Regularly checking your credit reports for any errors and unusual hard credit checks is important for your overall financial health. If a hard pull was performed without your consent, it could be attempted identity theft.
If you find your credit was pulled without your permission, you can:
- Reach out to the creditor. Speak to the creditor directly to learn more. According to the Federal Trade Commission (FTC), 1 in 5 people find errors on their credit report, so there is a chance the credit pull was made in error.
- Submit a dispute to the credit bureaus. If you find the credit pull was done in error or without your permission, you can submit a dispute to whichever of the credit bureaus reported the inquiry. Typically, the dispute process is completed within 30 days.
- File a complaint. You can submit a complaint to the Consumer Financial Protection Bureau (CFPB) or visit IdentityTheft.gov (which operates under the FTC) if you believe your credit was fraudulently used. The FTC also provides a recovery plan in the case of fraudulent activity.
Get your credit reports for free at AnnualCreditReport.com.
How to prepare for the impact of a credit check
If you’re concerned about the impact an inquiry on your credit may have on your score, there are a few ways you can keep the effects to a minimum.
- Check if you prequalify: An important first step when it comes to shopping around for credit is to confirm if lenders allow you to prequalify. Prequalifying for a credit card or loan with a soft inquiry will not impact your credit. Prequalifying will also allow you to see what kind of rates, terms, amounts and fees you may receive from a creditor, so you can compare lenders more easily before committing to one.
- Improve your score: Making sure your credit score is in a healthy place before you apply for credit can not only limit the impact of a credit check but also help you get lower interest rates and better terms. To do this, you can consult with a credit counselor who can help you navigate the ins and outs of improving your credit score.
Frequently asked questions
The number of hard credit pulls on your report can play a role in determining your creditworthiness in the eyes of lenders. Many hard pulls on your report might suggest that you have or are about to take on a lot of debt. As a result, creditors may assume you have (or will have) a high debt-to-income ratio and could be a credit risk.
A soft credit pull can show information such as credit accounts, late payments, collection activity and hard credit inquiries. Only you can see what soft credit inquiries have been run on your credit report.
On the FICO Score model, a hard credit inquiry can bring down your score by up to five points. Since the FICO scale ranges from 300 to 850, this amount is typically a small drop in the bucket. Hard credit pulls can remain on your credit report for up to two years.