Credit Inquiries: Hard vs. Soft Pulls

A credit inquiry, or credit pull, is when a person or company requests to view your credit report. There are two types of credit pulls: hard inquiries and soft inquiries. Understanding how each works and how they can affect you will help you make better financial decisions. Let’s take a closer look at the differences between hard and soft credit inquiries:

Hard Credit Inquiry

When you apply for a new credit card, mortgage or other type of loan, the lender will do a hard inquiry (or hard pull) on your credit. This means they will access your full credit report for the purposes of making a lending decision. They use that information to assess how long you’ve been managing your credit, how you’ve handled credit in the past, how much credit you’re juggling, if you pay your bills on time, and whether you have any derogatory marks on your credit report. All these factors help lenders decide whether to extend new credit to you or give you additional credit. Your credit score can also affect the interest rate you receive in what’s called risk-based lending situations. Hard inquiries can lower your credit score, especially if you have too many pulls in a short amount of time. A hard inquiry will stay on your report for up to two years, though your score is usually only impacted for a year or less. You can reduce the impact of hard inquiries by following these guidelines:
 

• Apply strategically. Space out your applications and make use of prequalification.
• Practice good credit habits. Good credit habits go a long way in keeping your credit score healthy. Pay your bills on time and in full and monitor your credit.

When you’re buying a home or car, don’t let a fear of racking up multiple hard inquiries stop you from shopping for the lowest interest rates. FICO gives you a 30-day grace period before certain loan inquiries, like those for mortgage or auto, are reflected in your FICO credit scores. And they may record multiple inquires for the same type of loan as a single inquiry if they’re made within a certain window (typically about two weeks). A hard credit pull accesses your full credit report. The lender will have access to your full credit history, and the pull itself will be noted in your credit file for future lenders to observe. Meanwhile, a soft pull doesn’t give the full picture -- but it also doesn’t affect your credit. While soft pulls may be run on your credit without your consent, hard pulls always require your consent.

Soft Credit Inquiry

Soft inquiries (or soft pulls) typically occur when a person or company checks your credit as part of a background check (for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain credit card offers or your employer runs a soft inquiry before hiring you). When you check your own credit, this is also run as a soft inquiry. 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 or financial institution involved to distinguish whether it’s a hard or soft credit inquiry. Unlike hard inquiries, soft inquiries don’t affect your credit score. They are also typically not recorded in your credit report. You can check your VantageScore 3.0 credit score from TransUnion, for free using Credit Score powered by SavvyMoney within your Point Breeze Credit Union online banking or mobile app, as often as you like without affecting your credit score.
 
Your credit scores play a big role in your financial well-being. We recommend checking your credit reports often. Regularly checking your credit scores and credit reports can help you better understand your current credit position as well as what potential lenders are seeing. Reviewing your credit report can also help you detect any inaccurate or incomplete information. If you spot any errors, such as a hard inquiry that occurred without your permission, consider disputing it with the credit bureau. This could be a sign of identity theft. At the very least, you’ll want to investigate it and understand what’s going on.
 
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