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Hard And Soft Credit Pulls: What’s The Difference?

Sarah Li Cain4-minute read
March 30, 2021

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Whether you’re applying for a credit card or another type of loan, it’s helpful to check your credit score. That’s because creditors or lenders want to look at your credit report through either a hard or soft credit check. It’s important to understand the differences between a soft and hard inquiry and how it could affect your credit score.

While a credit pull doesn’t affect your credit score that much, a little ding could mean the difference between an excellent and good credit score. If you’re looking to get approved for a loan with the most favorable interest rates, you’ll want to pay attention. Not doing so can cost you additional money.

Let’s explore the difference between a soft and hard credit check and how they can affect your credit score.

What Is A Hard Credit Pull?

When applying for credit (credit cards, auto loans or a mortgage) the lender will ask for a copy of your credit report and score from at least one of the three major credit bureaus in order to assess whether you’re considered creditworthy.

Since the lender “pulls” your credit when you submit an application, this is considered a hard credit inquiry and can affect your credit report and credit score. You’ll know it’s a hard credit check because you’ll be asked for your consent in order to complete an application.

How Do Hard Credit Pulls Affect Me?

If you have too many hard inquiries within a short time span, this could affect how lenders see you. Multiple hard inquiries mean you’re applying for multiple loans which could mean numerous new loans. Lenders may think you’re a riskier lender because opening too many accounts at once could mean you’re overextending yourself financially.

In other words, hard credit pulls could temporarily lower your credit score. However, credit scoring models do take into consideration that you’re shopping for the best rates which could mean you’re submitting multiple applications at once. In this case, multiple hard inquiries within a short time span (for certain types of loans like mortgages and car loans) won’t have as huge of an impact on your credit score. Instead, it’ll count as a single inquiry.

Of course, there are other factors that are used to calculate credit scores. These include your adjusted gross income (especially for mortgage applications), payment history, the types of credit you have and your credit utilization ratio (the ratio between your available credit and how much you’re currently using).

Examples Of Hard Credit Pulls

  • Student loan applications
  • Applying for a credit card
  • Getting a credit or loan increase
  • Signing an internet or cell phone contract
  • Opening a home equity line of credit (HELOC)

What Is A Soft Credit Pull?

A soft inquiry can occur without your knowledge; it’s intended to quickly check your credit in order to preapprove you for offers. If you’ve been getting credit card offers in the mail, it means someone has done a soft inquiry on your credit.

Does A Soft Credit Check Affect My Score?

A soft credit check doesn’t affect your credit score. They don’t show up on your credit report except for in a few cases, including when debt settlement companies (who are authorized to have access to your credit report) or insurance companies inquire about your score. But these credit pulls aren’t considered as a factor in your credit score since lenders won’t be able to see them (aside from insurance companies seeing other insurance companies’ credit inquiries).

Examples Of Soft Credit Pulls

  • Employer getting your background check
  • Getting preapproved for a credit card or other types of loan offers
  • Checking your own credit report
  • Identity verification

How Much Does A Hard Credit Pull Hurt My Credit?

While a hard credit pull can lower your score up to five points, the actual amount depends on your credit profile. The amount of points can vary based on your credit history and other factors like the length of time between your last hard pull.

Like previously mentioned, it counts as one hard inquiry if you have multiple inquiries for the same types of loans within a short time span (typically 45 days). Hard inquiries will stay on your credit report for 2 years, but some credit scoring models like FICO® will ignore them after 12 months.

How To Avoid Hard Credit Pulls

It’s difficult to avoid hard credit pulls if you’re applying for loans or a credit card, but there are ways to avoid some of them if you plan ahead.

First, understand what your credit score is so you’re not applying for loans or credit cards you don’t qualify for. If you have a credit card, check if the issuer offers a free way to check your score. Otherwise, free services offer free credit reports.

You can also head to loan comparison websites. These will take your personal information and tell you what you might qualify for. Then, only apply for loans you absolutely need.

If you’re unsure whether something is a hard or soft inquiry, ask.

Disputing Credit Inquiries

Errors can happen. If you see one on your credit report, it’s important to dispute it. Check which credit reporting bureau has the error and contact them in writing so you can explain the error. The bureau should investigate and respond to your inquiry within 30 days.

Minimizing The Effect Of Hard Credit Pulls

If you’re comparing auto loans or mortgages, make sure to put in applications as close to each other as possible so it counts as a single hard inquiry. Otherwise, you can take additional steps to make sure that your credit score isn’t too negatively affected. This includes ensuring you make loan payments on time and lowering your credit utilization rate.

The Bottom Line

Applying for loans and credit cards starts with understanding your credit report as it’ll give you insight into what could affect your score and what you might qualify for. Rocket Homes Real Estate LLC offers a free credit report with TransUnion® as well as the ability to track your credit score. That way you can review any potential errors, get a clearer insight on how you can improve your score if needed and move toward your next financial goal.

Create a Rocket Account today.

Track your credit, manage your personal finances and get ready to buy a home.

Rocket HQSM has partnered with CardRatings for our coverage of credit card products. Rocket HQ and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

Sarah Li Cain

Sarah Li Cain is a freelance personal finance, credit and real estate writer who works with Fintech startups and Fortune 500 financial services companies to educate consumers through her writing. She’s also a candidate for the Accredited Financial Counselor designation and the host of Beyond The Dollar, where she and her guests have deep and honest conversations on how money affects our well-being.