A Soft and Hard Credit Pull Both Give Lenders Information About Your Credit History, but Only One Affects Your Credit. Here’s What to Know

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Recently, people seem a lot more interested in applying for new credit than they did in the past. 

The number of people who said they are likely to apply for a new credit card over the next 12 months increased from 8.3% in 2020 to 12.0% in 2021, according to a survey by the Federal Reserve Bank of New York.

There’s nothing wrong with applying for new credit if it helps you accomplish your financial goals, so long as you do so wisely. Every time you apply for a new loan, credit card, or mortgage, you’ll likely have to undergo a credit inquiry — also known as a credit pull or credit check — where a lender requests information about your credit history from the credit bureaus.

Credit inquiries are a necessary part of applying for new credit, but not all credit inquiries are created equal. Hard credit inquiries can cause a small dip in your credit score, while soft credit inquiries have no effect. While you shouldn’t let the prospect of a hard credit pull stop you from applying for the credit you need, being strategic about your new credit applications can help you keep your credit score in good shape. 

Pro Tip

As long as you’re not applying for new credit excessively, how you manage your current available credit will affect your credit score far more than any new inquiries. Make sure to always pay your bills on time and in full, and keep your credit utilization ratio low.

Here’s what you need to know about hard and soft credit pulls, and steps you can take to minimize their impact on your credit score. 

What are Hard and Soft Credit Pulls?

A credit inquiry, also known as a credit pull or credit check, is when a creditor requests information about you from one of the three credit reporting agencies: Equifax, Experian and TransUnion. 

When you review your credit report, you’ll see a section on “Credit Inquiries.” This section will show all credit inquiries that have occurred over the past two years. 

There are two main types of credit inquiries: 

  • Hard credit pull: Typically, the term “credit pull” refers to a hard credit pull. A hard credit pull happens when a creditor requests your information after you submit an application for a form of credit, such as a new credit card or mortgage
  • Soft credit pull: Soft credit pulls happen whenever someone reviews your credit file. If you check your own credit, apply for an apartment, or if an employer runs a background check and reviews your credit, a soft credit inquiry will occur. 

Usually, when a lender plans to run a soft credit pull — such as if you’re prequalifying for a personal loan or a credit card before you actually apply — you’ll see something in the fine print along the lines of “soft credit pull” or “will not affect your credit score.” When in doubt, you can always double check with the lender or institution that’s asking for the credit pull.

Hard Credit PullSoft Credit Pull
When It OccursThese occur when lenders review your credit after you apply for a credit card, loan, or other form of creditThese occur when you check your own credit, when lenders offer prequalification quotes, or when an employer or landlord checks your credit
Length of Time on Credit ReportFICO only considers inquiries from the past 12 months when calculating your credit score, but inquiries stay on your report for two yearsCan show up on the credit report for two years
Impact on Credit ScoreCan lower your FICO score by up to five pointsNo effect on credit score

Hard vs. Soft Inquiry: When Are These Inquiries Used?

Credit inquiries are a common occurrence, required for things ranging from getting a loan to applying for an apartment. But not all credit inquiries are created equal. To protect your credit score, it’s important to understand when credit inquiries occur and the effect they can have on your credit. 

Hard inquiries

Lenders pay particular attention to hard credit inquiries on your credit report, says Barry Coleman, vice president of counseling and education programs at the National Foundation for Credit Counseling, a non-profit credit counseling organization. 

“The current credit scoring algorithms look at whether or not the consumer is seeking additional credit,” Coleman says. “That’s because lenders worry about consumers potentially overextending themselves.” 

The following scenarios are examples of when you’d undergo a hard credit pull: 

Soft Inquiries

Soft credit inquiries show up on your credit reports, but they don’t affect your credit score. Soft inquiries can be more common, according to Amy Maliga, a financial educator with Take Charge America, a non-profit credit counseling agency

“A soft credit [pull] happens any time someone checks your credit,” Maliga says. “You check your own, an employer does a background check, you’re preapproved for mortgage or you get credit counseling like we offer at Take Charge America — a soft credit pull happens. It’s strictly informational.”

The following scenarios are examples of when you’d have a soft credit pull: 

  • You request a rate quote from a personal loan lender, and the lender specifies that getting a quote requires a soft inquiry that won’t affect your credit
  • You review your credit reports
  • You signed up for a credit-monitoring service that checks your credit on a monthly basis
  • A potential employer reviews your credit as part of a background check
  • You apply for life insurance

How Do Soft and Hard Credit Pulls Impact Your Credit?

The impact of a credit pull depends on the type of inquiry that occurs. While soft credit inquiries don’t change your credit score, hard credit inquiries do. 

“What can make [hard credit inquiries] scary is they have the ability to adversely affect your credit score,” Coleman says. 

A hard credit inquiry can reduce your score by as many as five points, according to credit scoring company FICO, but the impact is dependent on your existing credit history. 

Credit inquiries — both hard and soft pulls — can remain on your credit report for two years, but that doesn’t mean they’ll drag down your credit score for the whole time. Soft credit pulls won’t affect your score at all, and hard credit inquiries will affect your credit score for 12 months. However, a hard credit inquiry has less of an impact on your credit score as it ages. 

“Hard credit pulls can affect your credit score, but it’s a short-lived impact,” says Maliga. “Generally, if your credit is in good shape, a small dip isn’t a big deal.”

What Should You Do Before a Credit Inquiry?

Before applying for a new line of credit and consenting to a credit inquiry, use the following tips to limit the impact a credit inquiry will have on your credit score: 

  1. Review your credit report: “Always keep an eye on your credit report,” says Maliga. “Make sure any hard credit inquiries listed on there are things you initiated.” If you spot any inquiries that you didn’t consent to — or if you notice any other errors — you can dispute those items with the credit reporting agencies. If they’re found to be fraudulent or resulting from a mistake, the credit bureaus will remove them from your credit reports. You can access your credit reports for free at AnnualCreditReport.com
  2. Shop around using prequalification tools: Lenders that offer prequalification tools give you a convenient way to check your eligibility and possible rates without a hard credit inquiry. They can be a good way to comparison shop without damaging your credit. 
  3. Lump requests together: If you are rate shopping for a mortgage or loan, submit your quote requests close together. “Typically when someone is shopping for a mortgage or car loan, the credit scoring model looks at similar credit inquiries within a certain period of time and lumps those credit pulls together,” says Coleman. “They’re considered a single inquiry, so there’s not much of an impact on the credit score.”
  4. Check eligibility criteria before applying: Many lenders and credit card issuers list their minimum borrower requirements, such as minimum credit score and income, on their websites. By reviewing that information, you can see if you meet their criteria without having to fill out an application. 
  5. Limit new credit requests: New credit inquiries affect your credit score, and recent activity accounts for 10% of your credit score. “Don’t submit applications unless you really have a need,” says Coleman. “Don’t submit just to see if you can get a particular credit card.” 

Although a hard credit pull can negatively affect your credit score, the impact is typically quite small, and your credit score can recover quickly. What’s more important is how you use your credit once you get it — make sure to always pay your bills on time and in full, and keep a low credit utilization ratio on your credit cards. 

Don’t let fear of hard credit inquiries keep you from getting the credit you need to accomplish your financial goals. By managing your credit wisely and limiting new credit inquiries to only when you really need a line of credit, you can minimize the reduction in your credit score.