What’s a ‘Soft’ or ‘Hard’ Credit Inquiry? What You Need to Know About the Difference

If I had to list the most common questions people ask me about finances, credit inquiries would be at the top.

Usually, people want to know the difference between a soft and a hard credit inquiry, or what the effects of rate shopping are, especially when it comes to buying a house.

Sometimes it feels like these topics are intentionally confusing, even though that’s not necessarily the case. If you’ve ever found yourself asking about any of the above, you’ve come to the right place.

Here’s the lowdown on hard credit inquiries versus soft credit inquiries, and how these 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 vs. soft credit inquiry
• Soft credit pull vs. hard credit pull
• Soft credit check vs. hard credit check

Essentially a credit inquiry, credit pull, and a credit check all refer to when a lender checks your credit report.

Now you’re probably 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 credit. You are always going to be the one initiating this activity since your 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 it can happen without your knowledge is if someone steals your identity.

However, that’s not to say you’ll receive a notification when it happens. Therefore, just assume that a hard credit pull is going to happen every time you apply for new credit.

What’s a soft credit inquiry?

A soft credit inquiry, pull, or check is not triggered when you apply for credit. Therefore, unlike a hard credit pull, a soft credit pull can happen without you always realizing it.

However, it can be helpful to you since it’s a way for lenders to see if you are a reliable borrower without having to apply for credit.

A lot of 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.

At the end of the day, it’s important to remember lenders do a hard credit check when you apply for credit such as a loan, a credit card, a refinance, etc.

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

However, you can reach out to lenders 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 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. According to MyFico, “As far as your FICO® score is concerned, credit inquiries are classified as either ‘hard inquiries’ or ‘soft inquiries’ – only hard inquiries have an effect on your FICO score.”

A hard credit inquiry, on the other hand, does affect your credit score. Thankfully, the effect isn’t massive. Again, according to MyFico, a credit inquiry only takes less than five points off your FICO score.

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

If you want to avoid taking a big hit on your credit score, do all of your loan shopping within the span of a few weeks. Also, don’t vary the type of loan or loan amount you’re applying for.

Say you want to buy a $15,000 car. Shop for rates for about 14 days and always apply for that same amount. The credit reporting bureaus will understand that you’re rate shopping and will batch your inquiries.

On the other hand, if you apply for a car loan, a credit card, and a mortgage, your credit score will take the hit for each separate inquiry.

Your credit score will also go down if you apply for the same type of loan, but for different amounts. For instance, if you apply for one mortgage that’s $200,000 and another for $350,000.

Take your time and do your research

When it comes to shopping for new credit, 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.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!

Lender	Rates (APR)	Loan Amount
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi Disclosures Personal Loans: Fixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 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. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. 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, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. 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. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 2 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Personal Loan Rate Disclosure: Fixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. 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. 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. * Important Disclosures for Upgrade Bank. Upgrade Bank Disclosures Personal Loan Rate Disclosure: Fixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. 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. 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.
	7.73% – 29.99%	$1,000 - $50,000	Visit Upstart Check rate nowon SLH's secure site
	6.28% – 14.87%1	$5,000 - $100,000	Visit SoFi Check rate nowon SLH's secure site
	6.87% – 35.97%*	$1,000 - $50,000	Visit Upgrade
	8.00% – 25.00%	$5,000 - $35,000	Visit Payoff Check rate nowon SLH's secure site
	4.99% – 29.99%	$10,000 - $35,000	Visit FreedomPlus
	5.99% – 18.99%2	$5,000 - $50,000	Visit Citizens
	15.49% – 34.49%	$2,000 - $25,000	Visit LendingPoint
	5.99% – 35.89%	$1,000 - $40,000	Visit LendingClub
	5.49% – 18.24%	$5,000 - $75,000	Visit Earnest
	9.95% – 35.99%	$2,000 - $35,000	Visit Avant