‘Soft’ Credit Inquiry vs. ‘Hard’ Credit Inquiry: What’s the Difference?

 May 4, 2020
How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

hard credit inquiry

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Note to readers: Visit our Coronavirus Information Center for more information about how the response to the outbreak affects your student debt, and other forms of financial hardship.

Your credit report and score provide information that lenders and creditors use to decide whether or not to lend you money. There are two ways potential lenders and creditors check your credit: A hard credit inquiry or a soft credit inquiry.

So what’s the difference between the two? A hard credit inquiry impacts your credit score (usually by a few points), is reported on your credit history, and usually stays there for two years. A soft credit inquiry does not impact your score, but it also remains on your report for two years.

Here’s the lowdown on hard credit inquiries versus soft credit inquiries, and how these may potentially affect your credit score.

Hard vs. soft credit report checks

First off, let’s discuss the terminology attached to credit inquiries. Here are some of the most common opposing terms you’ll hear:

  • Hard credit inquiry versus soft credit inquiry
  • Soft credit pull versus hard credit pull
  • Soft credit check versus hard credit check

Essentially a credit inquiry, credit pull and a credit check all refer to when a lender checks your credit report. You may now be wondering what makes a credit pull, check, or inquiry “soft” or “hard.” Let’s take a look.

What’s a hard credit inquiry?

A hard credit inquiry, pull, or check is what happens when you apply for a credit card, personal loan, mortgage, auto loan or student loan. If you’re looking for a new apartment to rent, a potential landlord may ask to do a hard check of your credit as well.

The potential lender or creditor will request your credit score and your complete credit history from credit bureaus like Equifax, TransUnion and Experian. A credit application more or less gives the okay for the lender to check your credit.

Since this is something that comes from a credit application, the only way a hard credit inquiry can happen without your knowledge is if someone steals your identity and tries to open a new account in your name.

You may not receive a notification when the hard check happens, unless you are actively following your credit report, but it’s safe to assume that a hard credit pull is going to happen when you apply for new credit or a loan.

Because a hard credit check impacts your credit score, it is important to try to avoid getting hit with several hard checks at once in a short period of time. However, multiple applications for the same type of loan (such as a home or auto loan) within a certain period of time are generally counted as a single inquiry.

What’s a soft credit inquiry?

A soft credit inquiry, pull or check happens for many reasons. For example, if you apply for a pre-approval on a mortgage, a soft check occurs. When you receive a pre-approval letter for a new line of credit that you didn’t ask for, that’s an indicator of a soft pull as well. Additionally, when you check your own credit (and it’s a good idea to periodically do so), it will cause a soft credit inquiry. One of your existing creditors may occasionally perform a soft credit check as well.

A soft credit inquiry, unlike a hard one, can be helpful to you since it’s a way for lenders to see if you are a reliable borrower without you needing to apply for new credit.

Many soft credit pulls occur when lenders reach out to credit reporting bureaus to gather a pool of qualified candidates for something they want to offer, like a pre-approved credit offer. So those credit card offers you get in the mail? Chances are a soft credit pull happened beforehand.

It’s important to note that a credit card offer based on a pre-approval does not mean you’re already approved. You still have to apply for the credit card, after which the lender will do a hard credit pull to decide what to do. Sometimes this results in a modified offer rather than a straight-up approval or denial.

Soft credit checks can also happen when you’re checking your credit score. There are many sites you can use to check your credit score for free – and a soft credit check happens anytime you do that.

Which one will lenders use?

Lenders use hard and soft credit inquiries at different times and under different circumstances. They will most commonly do a hard credit check when you apply for credit such as a loan, a credit card, a refinance or a student loan.

On the flip side, lenders do a soft credit check when you either apply for a pre-qualification for a loan or when they reach out to credit reporting bureaus for a batch of pre-approved consumers.

However, you can reach out to lenders yourself to see if you prequalify for credit. When you send out an inquiry like this, lenders will do a soft credit check to see what kind of offer and interest rate you qualify for. For instance, our student loan refinancing partners will do this when you check your rate.

Once you decide what kind of offer you want and actually apply for it, a hard credit pull ensues.

How each type of credit check affects your score

A soft credit inquiry does not affect your credit score. A hard credit inquiry, on the other hand, does affect your credit score. Thankfully, the effect isn’t massive. According to MyFICO, a credit inquiry takes less than five points off your FICO score.

The time to worry about hard credit inquiries is when you trigger a lot of them. After all, each inquiry will add up and those few points could start to hit a higher number than you want.

If you want to avoid a big hit on your credit score, do all of your loan shopping within the span of a couple of weeks and don’t vary the type of loan you’re applying for. If you apply for a car loan, a credit card and a mortgage, your credit score will take the hit for each separate inquiry.

Take your time and do your research

When it comes to shopping for a new credit card or line of credit funds, be prepared. Do your research and use a soft or hard credit inquiry wisely so you can have a realistic idea of how much this new credit is going to cost.

Then, visit your budget to see what you can afford and stick to that amount. That way you don’t blow up your finances and have to worry about inadvertently damaging your credit score in the process.

Maya Dollarhide contributed to this report.

Interested in a personal loan?

Here are the top personal loan lenders of 2022!
LenderAPR RangeLoan Amount 
5.74% – 20.28%1$5,000 - $100,000

Visit SoFi

4.37% – 35.99%$1,000 - $50,000

Visit Upstart

5.94% – 35.97%*$1,000 - $50,000

Visit Upgrade

99.00% – 199.00%2$500 - $4,000

Visit OppLoans

5.99% – 24.99%3$5,000 - $40,000

Visit Payoff

7.99% – 20.88%4$5,000 - $50,000

Visit Citizens

9.99% – 35.99%5$2,000 - $36,500

Visit LendingPoint

10.68% – 35.89%6$1,000 - $40,000

Visit LendingClub

9.95% – 35.99%7$2,000 - $35,000

Visit Avant

1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 5.74% APR to 20.28% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 1/18/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5. Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $36,500, at rates ranging from a low of 9.99% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.

7 Important Disclosures for Avant.

Avant Disclosures

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Based on the responses from 7,302 customers in a survey of 140,258 newly funded customers, conducted from August 1, 2018 – August 1, 2019, 95.11% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.

Published in Credit & Debt,

Tagged in