The Difference Between a Hard Credit Pull and a Soft Credit Pull

Your credit score is an incredible tool that can build up your life if used properly and tear it down if abused.

The difference between a great credit score and an okay credit score might be the difference in 0.5% interest on a home or auto loan and thousands of extra dollars of interest paid.

If you’re looking to protect your credit score you need to be aware of the difference between a soft credit pull and a hard credit pull.  One can damage your credit score while the other is mostly harmless.

Do you know the difference?!?

Keep reading and you’ll learn the difference between a soft credit pull and a hard credit pull.  You’ll see which one is relatively harmless while the other can affect your credit score.  This is extremely important stuff to know, especially if you need a great credit score for an upcoming loan.

Two Types of Credit Inquiries: Soft Pull and Hard Pull

Here’s a look at the two types of credit report pulls.

What is a Soft Credit Pull?

Soft credit pull vs hard credit pull

When a company needs to determine your eligibility for a pre-approved offer like a loan or credit card, a soft inquiry of your credit is used.  When an employer wants to know if you are a financial risk, a soft inquiry is used.  Even banks use them when you open up a checking account simply to verify you are who you say you are.

Soft credit inquiries do not negatively impact your credit score.

In fact, a majority of the time you have no idea that a soft pull of your credit was made.

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When you get a lot of junk mail from credit card companies they have all made an inquiry of your credit before sending you the pre-approved offer letter.  They didn’t ask your permission to pull your credit in this way before sending the offer to you; they didn’t have to because it doesn’t negatively impact your credit score.

What is a Hard Credit Pull?

On the other hand, hard credit inquiries do impact your credit score.

Usually the impact is temporary in nature, but it is something to be aware of.

Unlike a soft credit pull, a hard pull is used to make a lending decision not a pre-approval decision.  The credit score is used to determine whether or not you will receive the loan product you are applying for.

This hard inquiry will drop your score down a few points for about 6 months.  The impact isn’t drastic if it only happens once, but if you have several spread out over a year it could have a stunning effect on your credit score.

Related: Use One of These Secured Credit Cards to Improve Your Credit History.

When is a Hard Credit Inquiry Used?

hard vs soft credit pull

The difference between a hard and soft credit pull is the difference in how much your credit score is affected.

Obviously, a hard credit pull is a much bigger deal than a soft credit pull.

The best part is you control when a hard inquiry happens because it is tied to you attempting to get some sort of an account.

Not sure which types of accounts can lead to a hard pull?  Here are some to be aware of:

  • Applying for a credit card
  • Applying for a home mortgage
  • Applying for an auto loan
  • Applying for a refinance of your home mortgage
  • Applying for a home equity line of credit
  • Applying for a store credit card
  • Applying for a checking or savings account
  • Applying for an investment account

You probably expect your credit score to take a hit if you applied for a credit card.  But a savings account or investment account?  These might be unexpected, but it depends on the financial institution you are opening the account with.  It makes sense to ask if you’ll be taking a hard credit pull just to open up the account.

How to Avoid Inquiries Damaging Your Credit Score

You shouldn’t be shamed out of opening a credit card or savings account that you want to open.  Having a hard inquiry on your report isn’t a big deal.  Having 100 of them in a year probably isn’t a good idea.

This is why it is always recommended to do your price shopping for loans or credit cards during a short period of time.  If you need to buy a car and need a loan, don’t spread your search out over 3 months.  Apply for the loans all in the same weekend so the inquiries all hit at the same time — the credit bureaus will figure out that you’re just getting a car loan for one car, not five car loans for five cars because you applied at five different banks.

Glen’s note: Some people take advantage of credit card offers for travel rewards.  You can really get ahead with this kind of travel hacking but you have to realize when you apply for a new card you are taking a “hard pull.”  One thing you can do is apply for cards over a short time frame rather than spread them out.

Pull Your Free Credit Report to See Inquiries

You can see how many inquiries you’ve had by pulling one of your three free annual credit reports through AnnualCreditReport.com.  (Make sure you don’t check all three reports at once — space them out during the year to help monitor your accounts.)

Thankfully, checking your own credit report in this way only counts as a soft inquiry (again, because you aren’t making a lending decision).  Each bureau lists out inquiries in a different way, but they’ll show you who has been looking into your credit recently.

Related: Places to Check Your Credit Score Free.

Final Thoughts on Hard Credit Pulls Vs Soft Credit Pulls

Knowing the difference between the two types of credit inquiries can help you protect your credit score over the long run.

If you need to get a loan, do your price shopping all in a short period of time to minimize the negative impact of the hard credit inquiries.  And don’t forget to use your free credit reports that the government requires the credit bureaus to give you to keep tabs on your entire credit history and inquiries.

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Published or updated June 16, 2014.

Comments

  1. Thanks for a very good summary.

    Soft pulls are also registered when someone checks their own report.

    Also existing lenders routinely review credit reports for any changes in credit behavior and a soft pull is registered. Lenders use these data to make credit line changes, and sometime may close an account if they detect a deterioration in behavior.

  2. Jenna, Adaptu Community Manager says:

    Thanks for explaining the differences.

  3. What is like a credit karma or quizzle pull?

  4. This is another very informative post. It is great to know the difference between the two credit pulls. Thanks for sharing!

  5. Great explanation! Its valuable to understand the difference between these credit score checks and the potential impacts they can have. It sounds like any time when lending decisions might be made, its best to send the inquires in over a shorter period of time

  6. This was a great explanation and summary. Thanks for clarifying it!

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