The difference between a 'soft' and a 'hard' inquiry on your credit report
When a potential creditor checks into your credit, it鈥檚 called 鈥減ulling your credit.鈥� But two different types of credit checks can be聽performed: a 鈥渟oft inquiry鈥� or聽a 鈥渉ard inquiry.鈥澛犅爌laces 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聽not adversely affect your credit score; a hard inquiry will.
Soft pulls
Soft inquiries often occur without you even knowing about them.聽If you鈥檝e ever received a credit card offer in the mail, it鈥檚 likely that the credit card company did a soft inquiry聽to see if you would even qualify for the card. After all, it聽doesn鈥檛 want to waste the postage on someone who doesn鈥檛 qualify. The same goes for other types of loan offers, or when a mortgage broker or lender does a pre-approval.
Employers聽also聽may do a background check on you. Employers often feel more comfortable hiring someone with聽, as they think it indicates聽a responsible individual.
Most importantly,聽聽is a soft inquiry, so never be afraid to check your credit for fear your own inquiry will hurt聽your score. (You are entitled to聽聽from each of the three major credit-reporting agencies.)
Hard pulls
Hard inquiries do affect聽. You will likely know about them 鈥� or rather, you had better know about them 鈥� because your consent is required. A hard inquiry聽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. A聽hard inquiry may shave聽up to 5 points off your聽. However, when you are 鈥渞ate shopping鈥� (such as for mortgage, student and auto loans), all inquiries within a 45-day period are considered one inquiry., FICO鈥檚 competitor, also has shopping windows that count as a single inquiry,聽though they are聽generally shorter. A spokesman said a hard inquiry can shave 10聽to聽20 points off a VantageScore.
You want to be careful not to hit your credit report with too many hard inquiries. Consider whether聽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聽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聽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.
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