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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
- What’s a soft credit inquiry?
- Which one will lenders use?
- How each type of credit check affects your score
- Take your time and do your research
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.
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.
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.
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.
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.
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!
|Lender||APR Range||Loan Amount|
|7.99% – 23.43%1||$5,000 - $100,000|
|4.37% – 35.99%||$1,000 - $50,000|
|7.46% – 35.97%*||$1,000 - $50,000|
|99.00% – 199.00%2||$500 - $4,000|
|7.99% – 29.99%3||$5,000 - $40,000|
|7.99% – 20.88%4||$5,000 - $50,000|
|7.99% – 35.99%5||$2,000 - $36,500|
|8.30% – 36.00%6||$1,000 - $40,000|
|9.95% – 35.99%7||$2,000 - $35,000|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
Fixed rates from 7.99% APR to 23.43% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 8/22/22 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.
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.
3 Includes AutoPay discount. Important Disclosures for Happy Money.
Happy Money Disclosures
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
Applications submitted on this website may be funded by one of several lenders, including: FinWise Bank, a Utah-chartered bank, Member FDIC; Coastal Community Bank, Member FDIC; Midland States Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. 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 7% may apply depending upon your state of residence. Upon final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. Loans are offered from $2,000 to $36,500, at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 72 months. Minimum loan amounts apply in Georgia, $3,500; Colorado, $3,001; and Hawaii, $1,500. For a well-qualified customer, a $10,000 loan for a period of 48 months with an APR of 24.34% and origination fee of 7% will have a payment of $327.89 per month. (Actual terms and rate depend on credit history, income, and other factors.) The $15,575.04 total amount due under the loan terms provided as an example in this disclaimer includes the origination fee financed in addition to the loan amount. Customers may have the option to deduct the origination fee from the disbursed loan amount if desired. If the origination fee is added to the financed amount, interest is charged on the full principal amount. The total amount due is the total amount of the loan you will have paid after you have made all payments as scheduled.
6 Important Disclosures for LendingClub.
7 Important Disclosures for Avant.
*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 Annual Percentage Rates (APRs) of 7.46%-35.97%. All personal loans have a 1.85% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% 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 $341.48. Over the life of the loan, your payments would total $12,293.46. 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. Personal loans issued by Upgrade’s bank partners. Information on Upgrade’s bank partners can be found at https://www.upgrade.com/bank-partners/ .