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How Soft and Hard Credit Pulls Affect Your Credit

If you want to apply for the best credit cards on the market, you must have a decent credit score. This means understanding how credit inquiries work. Different inquiries affect your credit score in different ways. But since they play a part in predicting the risk you pose to potential creditors, it pays to know their impact.

There are two basic types of credit inquiries: hard and soft inquiries.

What is the distinction between hard and soft credit inquiries, and how do they impact your credit score? Let’s take a closer look.


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How does a hard inquiry affect your credit?

A hard credit inquiry may also be known as a hard pull or a hard credit check. Most lenders will, of course, do a thorough examination before offering you a new credit line. They want to verify that you are managing your existing credit.

Common examples of a hard credit inquiry are:

  • Credit applications, such as credit card, loan, and mortgage applications.
  • Credit limit increase requests.
  • Requests for rental.
  • Many utility applications.

When these companies perform a hard inquiry, it will have an impact on your credit score.

A hard inquiry can result in a positive or negative outcome for your credit application, depending on your current score. If you have a poor credit score, you may be unable to get the credit you’re applying for. But if your hard inquiry reveals solid credit management on your part, you might be able to get a lower interest rate or higher credit limit.

The bottom line is a hard credit inquiry will be reflected on your credit history. But don’t worry. Your credit score will take no more than a 10-point hit and it will be erased from your credit report after two years.

So how can you protect yourself against damage to your credit score? Since you can’t avoid every application that will use a hard credit inquiry, keep these tips in mind.

  • Don’t apply for a large amount of new credit in a short amount of time. Several credit card applications at once reflect poorly on your ability to manage your spending. As a result, future lenders might question your reasons for seeking so much credit.
  • If you are applying for a car loan or a mortgage, try to complete the credit investigation within 45 days. Credit bureaus usually report this type of rate-shopping as a single credit inquiry, which will cause less damage to your credit score.
  • Only apply for credit you are reasonably confident you will be approved for. Just because someone with a clipboard stops you in the mall to offer you something free with your application does not mean you should apply. Choose your credit carefully.

Keep a record of the credit you apply for. If you discover an inquiry was created in error or by identity theft, you can submit a dispute with the credit bureaus to request that it be deleted. Consider where those credit queries may have originated before filing a dispute.

How does a soft inquiry affect your credit?

A soft credit inquiry is also known as a soft pull or soft credit check. It also allows third parties to watch your credit without linking it to loan choices. When you pull your own credit report, for example, you are performing a soft credit inquiry.

Certain companies will use a soft inquiry to get correct pricing or to track and trace theft. These inquiries will not affect your credit score.

The following are some instances of soft credit inquiries:

  • Credit offers with preapproval.
  • Credit monitoring services.
  • Insurance quotes.
  • Employer credit checks.

Since soft inquiries are not tied to a credit application, FICO and VantageScore do not track them. As part of a credit preapproval, a lender may undertake a soft credit check, but this is not the same as completing the credit application process.

The bottom line

Credit inquiries, both hard and soft, are common in day-to-day life. Although hard credit inquiries might reduce your credit score, the impact is minor and will be wiped from your credit record after two years. Soft credit inquiries will not affect your credit score.

It’s important to be aware of how inquiries affect your credit score. However, other factors, such as excessive credit card balances and late or missed payments, will have a much greater impact.

By practicing responsible credit habits, like paying on time and maintaining low balances, you are creating a healthy credit history. And the occasional hard credit inquiry will have very little effect on your overall credit score.


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