Hard vs. Soft Credit Inquiries: What You Need to Know

Learn about the differences to ensure your credit score works for you, not against you.

Hard vs. Soft Credit Inquiries: Why Knowing the Difference Matters

When it comes to managing your credit, understanding the difference between hard and soft inquiries is crucial. Both types of inquiries occur when someone checks your credit report, but they affect your credit score differently. Let’s dive into the details of hard and soft inquiries and how they impact your financial health.

What is a Hard Inquiry?

A hard inquiry, also known as a “hard pull,” occurs when a lender checks your credit report as part of the lending decision process. This typically happens when you apply for:

Credit cards
Mortgages
Auto loans
Personal loans
Student loans

Key points about hard inquiries:

They require your permission
They can slightly lower your credit score (usually by a few points)
They stay on your credit report for up to 2 years
Multiple hard inquiries in a short period can have a more significant impact on your score

What is a Soft Inquiry?

A soft inquiry, or “soft pull,” is a more routine check of your credit report that doesn’t affect your credit score. Soft inquiries can occur without your direct permission and are often part of a background check or pre-approval process.

Examples of soft inquiries include:

Checking your own credit score
Pre-approved credit card offers
Employment background checks
Insurance quotes

Key points about soft inquiries:

They don’t require your explicit permission
They don’t affect your credit score
They’re only visible to you on your credit report

Why the Difference Matters

Understanding the distinction between hard and soft inquiries is important for managing your credit effectively:

Loan Shopping: When shopping for a mortgage or auto loan, multiple inquiries within a short period (usually 14-45 days) are typically counted as a single inquiry, allowing you to compare rates without excessive damage to your score.
Credit Card Applications: Unlike loans, each credit card application usually results in a separate hard inquiry. Be selective when applying for new cards to minimize the impact on your score.
Monitoring Your Credit: Regularly checking your own credit score using services that use soft pulls won’t harm your credit and is a good financial habit.
Employment: Know that potential employers can check your credit, but these checks won’t affect your score.

Minimize Hard Inquiries for a Healthier Score

While you shouldn’t be overly concerned about inquiries, it’s wise to be aware of them. Limit hard inquiries by only applying for credit when necessary, and feel free to check your own credit regularly – it won’t hurt your score. By understanding how inquiries work, you can better manage your credit and work towards improving your financial health.

Remember, if you’re concerned about the impact of inquiries on your credit score or need help improving your credit, don’t hesitate to contact Credit Services of America. Our team of experts is here to guide you through achieving and maintaining a healthy credit profile.