Credit Inquiries: Hard Pull vs. Soft Pull

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A lot of people don’t know this, but there are actually a couple different types of credit inquiries. Knowing the differences between them is very important when you’re trying to maintain a healthy credit score.

First off, different people/organizations perform credit inquiries on your credit report or score. Small business lenders, potential employers, credit card issuers, and even you yourself can perform credit inquiries on your report. Each of these will have varying impacts on your score as well.

FICO determines how to weigh the credit check depending on the type of credit inquiry. This can change based on why it was done and who actually made the inquiry.

We are going to discuss the two types of credit inquires, soft inquires, or “soft credit pulls”, and hard inquires, or “hard credit pulls”.

SOFT CREDIT INQUIRIES

Soft credit inquiries have a softer impact (as you can guess by the name) on your credit reporting history.

Soft credit inquiries refer to all credit inquiries where your credit is not being reviewed by a potential lender. The list below includes the times for which a soft credit pull is usually taken. These aren’t always soft pulls, but the majority of the time they are.

TYPES OF SOFT CREDIT PULLS

• Background checks for employers: Almost always.

• Checking your own credit score: Almost always.

• Pre-approval for loan and credit card offers: Almost always.

• Applying to rent an apartment: Sometimes.

• Identity verification by a financial institution: Sometimes.

• Opening a savings or checking account: Sometimes.

• Renting a car: Sometimes. 

It is easiest to compare soft credit inquiries to background checks. They are informal looks into your credit report, and they can even happen without your approval.
The most important thing to note about soft credit inquiries is that these types of inquiries do not affect your credit score.

HARD CREDIT INQUIRIES

Hard credit inquiries are one step up from soft credit inquiries. Hard credit inquiries are considered serious inquiries and are made before you receive a loan, line of credit, mortgage, or other major credit lines.
Most hard credit inquiries come from banks, credit card issuers, lenders, and other major financial institutions. One major thing to keep in mind is even if the lender ultimately turns you down and decides not to extend you the credit, your credit report will still show a hard credit pull.
Hard credit inquiries stay with you on your credit report for a period of time. Approval or non-approval, a hard credit inquiry will show for a maximum of 2 years. Below is a list of some of the inquiries that are usually considered hard pulls.

TYPES OF HARD CREDIT PULLS

• Applying for a small business loan: Almost always.

• Applying for a personal or business credit card: Almost always.

• Applying for a student loan: Almost always.

• Applying for a mortgage: Almost always.

• Applying for an auto loan: Almost always.

• Applying to rent an apartment: Sometimes.

• Getting a cell phone contract: Sometimes.

• Opening a checking, savings, or money market account: Sometimes.

• Renting a car: Sometimes.

• Requesting a credit limit increase: Sometimes.
The most important thing to remember about hard pulls is that that they do impact your credit score. One of the major ways to tell if you are going to have a hard inquiry taken on your credit history is by being required to give permission for it to happen.

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