Hard Credit Inquiry vs Soft Credit Inquiry: Key Differences and How They Impact Your Credit Score
Hard and soft credit inquiries are records of when someone requests one of your credit reports. Both types of credit checks can stay on your credit report for two years, but only hard inquiries affect your credit scores.
In general, hard inquiries have a relatively minor impact on credit scores. You may want to focus your energy and attention on the more important scoring factors, such as your payment history and credit utilization. However, it can still be helpful to understand how and when a credit inquiry—or credit pull—can affect your credit score.
What are hard inquiries and how do they impact your credit scores?
A hard inquiry is a record of when someone checks your credit for a lending purpose. These generally happen when you submit an application or request an extension of credit.
Examples of hard credit inquiries
Common examples of actions that can lead to hard credit checks include:
- Applying for a credit card, loan, or line of credit
- Asking for a credit limit increase on your credit card
Sometimes other actions can also lead to a hard inquiry.
For example, when you apply to rent a home or apartment, the landlord might want to review your credit. The credit checks might result in a soft or hard pull, so ask before giving your permission.
How do hard credit pulls impact your credit scores?
A single hard inquiry might have a minor negative impact, such as your score dropping one to 10 points. But as with all credit scoring factors, the impact of a new event depends on your overall credit profile.
You might see a larger drop if you’re new to credit or there are multiple hard inquiries, or a hard inquiry might not affect your score at all. Generally, if a hard inquiry does hurt your score, the score recovers in a couple of months.
The effect of hard inquiries on your credit score can also depend on the type of credit scoring model and what type of application led to the hard inquiry. Here are some of the general rules to keep in mind for FICO scores and VantageScore credit scores.
FICO’s hard inquiry rules
- Only considers hard inquiries from the previous 12 months.
- Ignores hard inquiries from auto, mortgage, and student loans that happened during the previous 30 days.
- “Deduplicates” (count multiple hard inquiries as one) hard inquiries from auto, mortgage, and student loan applications. For example, if you apply for five auto loans when you’re at a dealership, that would only count as one hard inquiry for scoring purposes. Recent FICO models use a 45-day window, so you have over a month to shop for a loan.
VantageScore’s hard inquiry rules
- Considers hard inquiries from the previous 24 months.
- Doesn’t ignore recent hard inquiries.
- Deduplicates hard inquiries from all types of loans, including for credit cards and personal loans, using a 14-day window.
What are soft inquiries and how do they impact your credit scores?
Soft inquiries are generally the result of someone reviewing a credit report for non-lending purposes.
Organizations can get a copy of your credit report without asking your permission if they have a permissible purpose—the federal Fair Credit Reporting Act (FCRA) defines when this is allowed. Credit bureaus keep records of these credit checks as well, but they don’t affect your credit scores.
Examples of soft credit inquiries
A soft inquiry could be added to your credit report when:
- You check your own credit score or report. You might request free credit reports from AnnualCreditReport.com, directly from the major credit bureaus, or use a credit monitoring program. Each check will lead to a soft inquiry.
- A current creditor reviews your credit. Creditors often review customers’ credit reports as part of account monitoring. For example, a credit card issuer might decide to raise or lower your credit limit depending on changes in your credit report.
- You request a preapproval. Creditors might let you check to see if you’ll likely qualify for a loan or credit card offers without affecting your credit score. These generally result in a soft inquiry.
- You’re prescreened for credit or insurance. Creditors and insurance companies also work with the credit bureaus to get prescreened marketing lists of people who qualify for their products.
Phone, utility, cable, and insurance companies may also want to check your credit when you apply for a new account or policy. Employers might also check your credit as part of a background check. These generally result in a soft inquiry.
How do soft credit pulls impact your credit scores?
Soft credit inquiries never affect your credit score. You can check your own credit reports as often as you want, and repeatedly try to get pre-approved or prequalified for credit accounts with a soft pull, and your credit scores won’t take a hit.
3 steps you can take to minimize the impact of hard inquiries
Hard inquiries generally don’t have a large impact on your credit scores, so try not to hyper-focus on them. However, you also don’t want to ignore them, and there are a few simple things you can do to avoid unnecessarily hurting your credit:
- Try to get preapproved with a soft pull. If you want a loan or credit card, see if the lender or credit card company offers a pre-approval or pre-qualification form that uses a soft credit check.
- Check your credit before applying. Some creditors don’t offer pre-approvals, but they list a minimum credit score requirement. You can check your credit scores to see where you’re at and try to estimate your chances of approval.
- Batch your applications when rate shopping. Comparing multiple offers is a good way to make sure you’re getting the best loan possible, but try to submit the applications within a short period of time to minimize the impact of the hard inquiries.
Limiting how often you apply for and open new credit accounts can also help you avoid new hard inquiries. However, if you want to build credit, having open accounts that report your on-time payments to all three credit bureaus—Equifax, Experian, and TransUnion—is important.
That’s why Ava uses soft credit checks for the Credit Builder Card and Savings Builder. Applying won’t affect your credit scores, but using the accounts and making your payments on time can help you build credit and improve your credit scores.
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