Soft vs. Hard Credit Inquiries: What's the Difference?

article by Foster I. author
Credit scores are affected by a variety of factors, some of which are widely-understood and some of which are not. One of the more confusing actions that can affect credit is how often it’s looked into. Known as an inquiry, these requests can actually do more harm than good if not executed properly.

There are two types of credit inquiries that can be made: a soft inquiry, or soft ‘pull’, and a hard inquiry, or ‘hard pull.’ Before you get nervous about what someone else is doing to your credit score, take a look at the differences between a hard and soft credit inquiry, and find out what you need to know about this aspect of credit.

What Is a Soft Inquiry?

Soft inquiries are the light version of a credit check. These are performed more often than you might imagine and from all sorts of sources. Employers will do a soft pull on potential employees before hiring them to see what kind of credit history the applicant has. Credit card companies will also run a soft inquiry to see if you are eligible for their card. Even preapproval for an online loan will require a soft inquiry.

While this might feel invasive, the good news is that a soft inquiry has no effect whatsoever on your credit score. So no matter how often they’re performed, you won’t be affected negatively.

What Is a Hard Inquiry?

A hard inquiry is a horse of a different color. Hard pulls are done when you apply for a mortgage, personal loan, student loan, credit card, auto loan, or other types of loans or refinances. Unlike soft checks, anyone who wants to run a hard inquiry needs to obtain the borrower’s permission first. The downside to hard inquiries is that they can lower your credit score, sometimes by as much as five points from FICO (it can even be as high as 20 points for other competitors like VantageScore). This is something to consider before giving anyone permission to run a hard inquiry, but also keep in mind that this is inevitable when you’re applying for a loan or new credit card.

Whether you are applying for a secured or unsecured loan, it’s probably going to require a hard inquiry. The good news here is that any number of pulls performed within a 45-day period are counted as one inquiry, regardless of how many times the information is actually pulled. The reason this is encouraging is because generally when you are applying for an online personal loan or another type of borrowing, you’ll want to apply to several lenders at the same time. This way you can compare rates and terms, and choose the loan that is most appealing to you.

Think Twice Before Consenting

Before you give the approval for a hard pull, ask yourself if the benefits you’re gaining are worth the loss in points. If your credit score can handle a slight decrease and the new line of credit is critical, go for it. Otherwise, you may want to reconsider. Oh, and checking your own score is a soft pull, so don’t worry about checking it once in a while.