When you apply for a loan or credit card, the lender will likely review your credit history as part of the process. This review is known as a credit inquiry. There are two types of inquiries: hard and soft.
A hard inquiry generally happens when you apply for new credit and can affect your credit scores. A soft inquiry can happen for various reasons, including when you check your own credit, and it does not affect your scores.
We’ll explain the differences between hard and soft credit inquiries, provide examples of each, and outline how to manage their effect on your credit.
- What is a hard inquiry?
- What is a soft inquiry?
- Examples of hard credit inquiries and soft credit inquiries
- How to dispute hard credit inquiries
- How to minimize the effect of hard credit inquiries
- Where can I check my credit score for free?
- FAQs about soft credit checks
What is a hard inquiry?
Hard inquiries (also known as “hard pulls” or “hard credit checks”) generally occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them.
A hard inquiry could lower your scores by a few points, or it may have a negligible effect on your scores. In most cases, a single hard inquiry is unlikely to play a huge role in whether you’re approved for a new card or loan.
The impact on your credit scores usually decreases or disappears before the inquiry drops off your credit reports, which generally takes about two years.
However, multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer. It may suggest that you are short on cash or preparing to take on a lot of debt. For this reason, it can be beneficial to spread out your credit applications.
How many hard inquiries is too many?
The effect of a hard inquiry on your credit scores depends on your overall credit health. In general, one or two hard inquiries on your credit reports could lower your scores by a few points but is unlikely to have a significant impact.
Having many hard inquiries within a short time frame will likely have a greater impact on your scores. This is because lenders and credit-scoring models may view multiple credit applications in a short period as a sign of risk.
There can be exceptions when you’re shopping for specific types of loans, like car loans, student loans or mortgages.
What is a soft inquiry?
Soft inquiries (also known as “soft pulls” or “soft credit checks”) typically occur when a person or company checks your credit as part of a background check.
This may happen, for example, when a credit card issuer checks your credit without permission to see if you qualify for certain credit card offers. An employer might also run a soft inquiry before hiring you.
Unlike hard inquiries, soft inquiries won’t affect your credit scores. They may or may not be recorded in your credit reports, depending on the credit bureau.
Since soft inquiries aren’t connected to a specific application for new credit, they’re only visible to you when you view your credit reports.
Will checking my own credit scores result in a hard inquiry?
No, checking your own credit is reported as a soft credit check, so it will not lower your scores.
You can check your VantageScore 3.0 credit scores from two of the major credit bureaus, Equifax and TransUnion, for free on Credit Karma as often as you like without affecting your credit scores.
How do soft inquiries work?
A soft inquiry reviews information from your credit reports, but it isn’t connected to an application for new credit. For that reason, it’s treated differently from a hard inquiry and doesn’t affect your credit scores.
When you check your own credit or receive a prequalified offer, a soft inquiry may appear on your credit report. These inquiries are visible only to you. Lenders and other third parties can’t see them or use them in lending decisions.
Examples of hard credit inquiries and soft credit inquiries
The difference between a hard and soft inquiry to whether you gave the lender permission to check your credit. If you did, it may be reported as a hard inquiry. If you didn’t, it should be reported as a soft inquiry.
Common hard credit pulls
- Mortgage applications
- Auto loan applications
- Credit card applications
- Student loan applications
- Personal loan applications
- Apartment rental applications
Common soft credit pulls
- Checking your credit score on Credit Karma
- “Prequalified” credit card offers
- “Prequalified” insurance quotes
- Employment verification (i.e., background check)
Keep in mind, there are other types of credit checks that could show up as either a hard or soft inquiry. For example, utility, cable, internet and cellphone providers will often check your credit.
If you’re unsure how a particular inquiry will be classified, ask the company, credit card issuer or financial institution involved to distinguish whether it’s a hard or soft credit inquiry.
How to dispute hard credit inquiries
It is a good practice to check your credit reports often. If you spot any errors, such as a hard inquiry that occurred without your permission, consider disputing it with the credit bureau.
An unauthorized hard inquiry could be a sign of identity theft. At the very least, you’ll want to look into it and understand what’s going on.
Keep in mind, you can only dispute hard inquiries that occur without your permission. If you’ve authorized a hard inquiry, it will generally remain on your credit reports for two years.
How to minimize the effect of hard credit inquiries
When you are shopping for a home or a car, don’t let a fear of multiple hard inquiries prevent you from shopping for the lowest interest rates.
Some FICO® scoring models provide a grace period, often 30 days, before certain loan inquiries, such as for mortgages or auto loans, are reflected in your FICO® credit scores.
Additionally, some scoring models may count multiple inquiries for the same type of loan as a single inquiry, as long as they are made within a specific time frame, which is typically about 14 days.
While some lenders may use scoring models that provide more time, you may want to complete your comparison shopping within a 14-day window, since you likely won’t know which scoring model a lender uses.
Where can I check my credit score for free?
Credit Karma provides its members with access to their VantageScore 3.0 credit scores from Equifax and TransUnion for free. Your credit scores may vary between credit bureaus depending on what information is reported to each bureau and when the information is updated. The good news is that checking your scores through Credit Karma won’t impact your credit scores, so you can check them as often as you want to keep tabs on your financial health. It’s also increasingly common for banks and lenders to offer the ability to check your scores and reports.
Next steps
Your credit scores play a big role in your financial well-being. Before applying for new credit, take time to build your credit scores. With stronger credit, you may improve your chances of being approved for the financial products you want at the best possible terms and rates.
Avoid applying for multiple credit cards within a short amount of time. While one hard inquiry may knock a few points off your scores, multiple inquiries in a short amount of time may cause more damage — unless you’re rate-shopping for a home or car, in which case you’ll likely have a grace period to shop around.
FAQs about soft credit checks
A soft credit check provides a view of your credit report. This includes your personal identifying information, credit account history, payment history, public records like bankruptcies, and a list of both hard and soft inquiries.
The company conducting the check uses this information to help make a decision, such as whether to send you a prequalified credit offer.
The term “fail” doesn’t apply to a soft credit check. It is not a pass/fail test.
A soft check is a review of your credit information. Based on that review, a company will make a decision.
For example, you may not receive a prequalified loan offer or a potential employer may decide not to move forward with your application, but the soft inquiry itself doesn’t generate a passing or failing grade and does not harm your credit scores.
A company or individual might perform a soft credit check for several reasons. Common examples include:
• You’re checking your own credit scores and reports.
• Lenders or insurance companies determining if you are eligible for “prequalified” offers.
• A potential employer conducting a background check as part of the hiring process.
No. When you check your own credit, it results in a soft inquiry. Soft inquiries do not affect your credit scores.