Hard Pull vs. Soft Pull on Credit: What You Need to Know

Did you know that your credit score can be one of the most valuable assets in your financial future? That three-digit number helps lenders determine if you’re someone worthy of their business, how much it would cost to do so, and which options to give you. You can expect your credit score will impact numerous situations, such as applying for a credit card, renting an apartment, buying a car or home, or even deposit amounts for utility companies. With all that said, you want to make sure that you understand what can hurt your score and how to protect it. One factor that can have an influence is a credit inquiry. So what are the different types of credit inquiries? And more importantly, which kind can affect your credit? Let’s discuss.

To give you an overview, soft credit inquiries do not affect your credit score. Hard credit inquiries do.

What is a soft credit inquiry?

A soft inquiry, often called a soft pull, occurs when your credit score is checked, but you haven’t applied for credit. For example, this could occur because you checked your credit score with a free site, such as Credit Karma. Or, an employer may pull your credit score as part of a background check. Another situation may be when a credit card company “pre-qualifies” you and sends those pesky letters in the mail. Unlike a hard inquiry, a soft inquiry may occur without your knowledge. But don’t worry, soft inquires do not impact your credit score.

What is a hard credit inquiry?

A hard inquiry, or hard pull, typically indicates that you are actively trying to get credit. This means that a proposed lender (credit card companies, auto lenders, or mortgage lenders) will be checking your score to determine your lending eligibility. Hard pulls can minimally lower your credit score, and in most cases, it will stay on your credit report for two years.

How can you protect your credit against inquires?

If you want to apply for a credit card or loan, you can’t avoid the hard inquiry. However, there are a few things you can do to minimize the likelihood your score will be negatively affected by a hard credit pull. First, limit the number of your hard inquiries. While one hard pull may impact your score by a few points, if any, multiple inquires in a short time frame may cause significant damage to your score. Try to keep it to less than one or two a year, if possible. If you’re shopping around for a loan, make sure to keep it within a 14-45 day window. Credit bureaus can typically recognize that these multiple inquiries are actually grouped together as a single inquiry. That way you’ll only receive the negative impact once. Next, say “no thank you” to store credit cards offered to you at checkout. The one-time savings they offer usually aren’t worth the risk to your credit. Lastly, monitor your credit score. If you notice a hard pull on your report that you did not authorize or initiate, you may need to take action to dispute it with the credit bureaus. While the potential of your score dropping can seem very scary, it doesn’t need to be. Learning what impacts your score can help you easily and confidently get the credit you need.