Hard vs. Soft Inquiry: What You Should Know Before a Credit Pull

A bearded man walks down the street.
Getty Images

Every time you turn around, someone wants to run your credit. 

New apartment? The landlords want to see your credit. Applying for a job? Same thing. Oh, and that really cool “freebie” blanket you could get just for signing up for a new credit card? They’ll definitely run your credit first.

One thing you’ve probably heard is that credit pulls can hurt your credit score. How can that be? If you’re going to get credit, there needs to be a credit inquiry first, right?

There are two types of credit inquiries: hard and soft inquiries. What are they? How are they different? Here’s what you need to know to keep your credit score looking shiny.

Soft vs. Hard Credit Check

Both types of credit pulls involve someone checking in on your credit, but that’s about where the similarities stop. Here’s the difference between a soft vs. hard credit check and what it means for you.

Hard Inquiry

Simply put, a hard inquiry happens when a lender, like a bank or credit card company, runs your credit history as a part of its decision-making process. They may run your credit with one or more of the major credit bureaus. 

Will they give you that loan? Will you get that credit card? What they see on your credit report may make it happen…or not. 

Soft Inquiry

A soft inquiry happens when you check your own credit score or even if a lender checks it for the purpose of prequalifying you for a loan or credit card. 

If a potential landlord or employer does a credit check, that would also count as a soft inquiry. Think of it as a glance at your credit rather than a deep dive. 

FROM THE CREDIT FORUM

How Do Credit Inquiries Affect Credit Score?

Here’s where it gets interesting. Each type of credit pull affects your credit differently. Here’s how it breaks down for soft vs. hard credit checks. 

Hard Inquiry

Because a hard inquiry is used by someone who is actually checking your creditworthiness for the purpose of issuing you some form of credit, it factors into your credit score. 

Having multiple hard inquiries in a short amount of time could mean that you’re attempting to open multiple accounts. Why is that an issue? Because it could mean that you’re trying to use credit to stay afloat during financial troubles. 

Since that’s a red flag to lenders, hard inquiries have a negative effect on your account for a short time.

Soft Inquiry

Soft inquiries are not used to issue new credit to you and, therefore, do not affect your credit score. In fact, with a couple of exceptions, you are the only one who can even see soft inquiries on your credit report at all. 

The two exceptions are that insurance companies can see other insurance company inquiries, and lenders can see if you’ve had inquiries from debt settlement companies. 

Soft inquiries are not a factor in your credit score at all, so there’s no need to sweat them. 

Pro Tip

Before applying for a loan, show the lender your credit report and ask them to prequalify you. This way, you don’t have to apply multiple times and risk denial. 

3 Reasons Not to Worry Too Much About Credit Inquiries

Anything that can affect your credit score is worth your attention, but with credit inquiries, there’s little reason to panic. Here are a few things to keep in mind.

1. Multiple Inquiries Won’t Count Against You When You’re Loan Shopping

The credit bureaus understand that smart consumers are competitive shoppers. If you have multiple hard credit inquiries for a car loan, mortgage, or something similar, they’ll simply flag it as one hard inquiry. They want you to be a smart consumer, so why would they penalize shopping for the best loan? 

Pro Tip

If you’re shopping around for a loan, keep your search window to a two-week period. If it stretches out longer, you could end up with multiple credit inquiries on your report.

2. A Hard Pull Matters Less Than You Think

Most consumers will only see a drop in their score of five points to less for a single hard inquiry. Unless you have a bundle of inquiries happening at once, it’s not a big deal.

3. Other Factors Have a Bigger Impact on Your Score

There are five factors that determine your credit score. Credit inquiries only make up 10% of that. Your payment history and credit utilization ratio are much greater factors in the big picture.

Yes, you should be aware of credit inquiries and how they can affect your score, but there’s no reason to panic. There’s no need to worry that a potential landlord or employer doing a credit check will hurt your score. Shopping for the best car loan online? Go crazy. 

As for that cool freebie blanket? You’d do better to save up and buy one rather than get a credit card that’s not right for you. You’ll sleep better that way. 

Tyler Omoth is a freelance writer covering topics from personal finance to career advice and even lawn care. His work has been featured on TopResume.com, Writersweekly.com and more. He is also the author of over 70 educational books for children and a proud parent of twin toddlers.