What is the Difference Between Hard and Soft Credit Checks?
About Harrison
ExpertiseHarrison Pierce is a writer and a digital nomad, specializing in personal finance with a focus on credit cards. He is a graduate of the University of North Carolina at Chapel Hill with a major in sociology and is currently traveling the world.
Read full bioAt a Glance
A hard credit check is a detailed examination of your credit reports by a lender, landlord, or other organization. A soft credit check is when an individual or organization checks your credit history to pre-screen you for an offer or promotion. While a hard credit check can generate more data about your financial history and impact your credit score, a soft credit check does not. Soft inquiries are also visible on your report. However, they don’t affect your scores and remain visible only to you. Understanding the distinction between these two types of reviews can help you make the best decisions regarding managing your financial future.
What is a credit inquiry?
A credit inquiry is a lender or financial institution’s request to access your credit report to evaluate your creditworthiness for a loan or credit card application. This request results in a record of the inquiry being added to your credit report and can impact your credit score, although typically only a tiny amount.
What is a hard credit check?
A hard credit check, also known as a hard pull, is a type of credit inquiry that occurs when a lender or financial institution requests a full credit report to evaluate your creditworthiness for a loan or credit card application. This type of inquiry is considered “hard” because it can harm your credit score compared to a soft inquiry, which does not affect your credit score. Hard credit checks are a more in-depth evaluation of your credit history and are typically only performed when applying for a new loan or credit account.
Learn more: Hard Credit Inquiry
What is a soft credit check?
A soft credit check, also known as a soft pull, is a type of credit inquiry that occurs when a lender or financial institution requests a limited view of your credit report to pre-qualify you for a loan, credit card, or certain types of credit monitoring services. Soft inquiries do not impact your credit score; only you, the credit reporting agencies, and the company that requested the check can see it. Examples of when a soft check may be performed include pre-approval credit offers, checking your credit report, or when a potential employer checks your credit history.
Examples of soft and hard credit checks
Examples of soft credit checks:
- Checking your credit report
- Pre-approval credit offers
- Credit report monitoring services
- Potential employers checking your credit history
Examples of hard credit checks:
- Applying for a loan or credit card
- Refinancing a loan
- Applying for a mortgage
- Applying for a car loan or leasing a vehicle
Hard vs soft credit check
A hard credit check and a soft credit check are two different types of credit inquiries that can be performed by a lender or financial institution when evaluating your creditworthiness.
A hard credit check is a complete evaluation of your credit report that can negatively impact your credit score. Hard inquiries are typically performed when you apply for a loan, credit card, mortgage, or another type of credit.
A soft credit check is a limited view of your credit report that does not impact your credit score. Soft inquiries are typically performed for pre-approval credit offers, credit report monitoring services, or when an employer or potential landlord checks your credit history.
It’s essential to understand the differences between hard and soft credit checks and the circumstances in which they may be performed to make informed decisions about when to apply for credit or loans and how they will impact your credit score.
1. Impact on credit score
The impact of a hard credit check on your credit score can vary, but a hard credit check will typically lower your credit score by a few points. This is because a hard credit check is seen as a sign that you are looking to take on new debt, and too many hard credit checks in a short period can indicate financial stress or a higher risk of default.
On the other hand, a soft credit check has no impact on your credit score. Soft inquiries are only visible to you and the company that performed the check and do not appear on your credit report that lenders see.
It’s essential to consider the type of credit check when applying for loans or credit, as multiple hard inquiries can lower your credit score, making it more challenging to get approved for future credit or loans at favorable terms.
2. Time of inquiry
Hard credit checks remain on your credit report for up to 2 years and can affect your credit score for up to 12 months.
On the other hand, soft credit checks are not recorded on your credit report and do not affect your credit score. Soft inquiries only stay on your credit report for a limited time and are typically removed after 12-24 months.
It’s important to consider the type of credit check and the timing of inquiries. Multiple hard inquiries in a short period can lower your credit score and make it more challenging to get approved for future credit or loans at favorable terms.
3. Consent for check
Consent for a hard credit check is typically obtained when you apply for a loan or credit card and agree to a lender’s terms and conditions. The lender will then perform a hard credit check to assess your creditworthiness and determine if they will approve your application.
You may have given consent for soft credit checks when you signed up for credit monitoring services, pre-approved credit offers or when an employer or potential landlord requested a background check that included a credit report.
It’s important to understand when a credit check will be performed and what type of check it will be, so you can make informed decisions about when to apply for credit or loans and how it will impact your credit score. In general, you should avoid unnecessary hard credit checks and only apply for credit or loans when you are ready and have a good reason to do so.
Do credit checks affect your credit score?
Yes, credit checks can affect your credit score. Hard credit checks can lower your credit score, as multiple hard inquiries in a short period can indicate financial stress or a higher risk of default. Hard credit checks remain on your credit report for up to two years and can affect your credit score for up to 12 months.
Soft credit checks, however, do not impact your credit score and are not recorded on your credit report. Soft inquiries only stay on your credit report for a limited time and are typically removed after 12-24 months. Too many hard inquiries in a short period can lower your credit score and make it more challenging to get approved for future credit or loans at favorable terms.
Learn more: Do Credit Inquiries Affect Credit Scores?
FAQs
No, lenders cannot see soft credit checks. Soft credit checks are limited views of your credit report that are only visible to you and the company that performed the check. Soft inquiries do not appear on your credit report that lenders see, so they do not impact your credit score or signal to lenders that you are seeking new credit.
Only hard credit checks are recorded on your credit report and can be seen by lenders. Hard inquiries indicate to lenders that you have recently applied for credit and can impact your credit score.
It’s essential to understand the differences between hard and soft credit checks and the circumstances in which they may be performed to make informed decisions about when to apply for credit or loans and how they will impact your credit score.
The number of points you can lose due to a credit check varies depending on several factors, such as your overall credit history, the number of inquiries, and the timing of inquiries.
A single hard credit check can decrease your credit score by 5 to 10 points, while multiple hard inquiries in a short period can result in a more significant decrease of 20 to 50 points or more. The impact of hard inquiries on your credit score will typically decrease over time, with the effect fading entirely after 12 to 24 months.
Soft credit checks do not affect your credit score, as they are not recorded on your credit report and do not indicate to lenders that you are seeking new credit.
It’s important to understand the type of credit check and the timing of inquiries. Multiple hard inquiries in a short period can lower your credit score and make it more challenging to get approved for future credit or loans at favorable terms.
Multiple credit inquiries can count as one, depending on the inquiry type and timing of inquiries.
When you apply for a loan or credit card, multiple hard inquiries for the same type of credit within a specific time, such as 14 to 45 days, may be treated as a single inquiry by credit bureaus. This is known as a rate shopping rule, and it helps consumers to compare loan or credit card offers without worrying about damaging their credit score with multiple hard inquiries.
Soft inquiries do not impact your credit score, and multiple soft inquiries do not affect your credit score in any way.