What’s the Difference Between a Soft Inquiry and a Hard Inquiry on My Credit Report?

When a potential creditor checks into your credit, it’s called “pulling your credit.” But two different types of credit checks can be performed: a “soft inquiry” or a “hard inquiry.” The Fair Credit Reporting Act places restrictions on exactly when and why credit reports may be pulled.

The primary hallmark of a soft inquiry or soft pull is that it does not adversely affect your credit score; a hard inquiry will.

Why does it matter? Myfico.com explains why hard inquiries negatively affect your credit score and are best avoided when possible: “Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.”

Soft pulls

Soft inquiries often occur without you even knowing about them. If you’ve ever received a credit card offer in the mail, it’s likely that the credit card company did a soft inquiry to see if you would even qualify for the card. After all, it doesn’t want to waste the postage on someone who doesn’t qualify. The same goes for other types of loan offers, or when a mortgage broker or lender does a pre-approval.

Employers also may do a background check on you. Employers often feel more comfortable hiring someone with good credit, as they think it indicates a responsible individual.

Most importantly, checking your own credit is a soft inquiry, so never be afraid to check your credit for fear your own inquiry will hurt your score. (You are entitled to a free annual credit report from each of the three major credit-reporting agencies.)

Hard pulls

Hard inquiries do affect your credit score. You will likely know about them — or rather, you had better know about them — because your consent is required. A hard inquiry is triggered when you actually apply for credit, including a mortgage, credit card, auto loan, student loan, personal loan or a business loan.

This inquiry becomes part of your credit report, meaning anyone else who does a hard or soft pull will see the inquiry. Myfico.com suggests a hard inquiry may shave up to 5 points off your FICO score. However, when you are “rate shopping” (such as for mortgage, student and auto loans), all inquiries within a 45-day period are considered one inquiry. VantageScore, FICO’s competitor, also has shopping windows that count as a single inquiry, though they are generally shorter. A spokesman said a hard inquiry can shave 10 to 20 points off a VantageScore.

You want to be careful not to hit your credit report with too many hard inquiries. Consider whether those bonuses you are hoping to receive by getting that credit card are worth the ding to your credit score. If you have outstanding credit, a few points may not be a big deal. However, if you have borderline credit quality, think twice.

Hard or soft?

Some inquiries could be either soft or hard. If you rent a car, apply to rent an apartment, sign up for cable TV or Internet service, open an account at a financial institution, or someone just needs to verify your identity, you may get hit with either a hard inquiry or a soft inquiry. The only way to know is to ask the potential creditor, and maybe even check in with one of the credit bureaus.

This post updated June 24, 2016.  It originally published March 27, 2014.