When someone checks your credit (including you) it’s called a “credit inquiry”. Some inquiries or credit checks are considered hard credit checks, which means they can affect your credit. Other inquiries are considered soft credit checks, which will not affect your credit.
Learn more about the differences between hard and soft inquiries, including how they work, when they occur, and how they impact you.
What is a Soft Credit Inquiry or Soft Credit Check?
A soft inquiry or soft credit check occurs in cases where you check your own credit or when a business checks your credit to pre-approve you for an offer. For example, if you’ve ever received pre-approval offers for a specific credit card and credit limit in the mail, it’s likely that the credit card company completed a soft credit check before sending you the offer.
The reason it’s called “soft” is because they are typically not visible to creditors or lenders. They aren’t used to formally approve or deny credit.
How Does a Soft Inquiry Work?
Soft inquiries occur when someone — like a lender — checks your credit report, but you did not submit a new loan or credit application. Most of the time, you won’t even realize when a soft inquiry occurs, unless you initiate it.
Here are some examples of situations when a soft inquiry occurs:
- You check your own credit.
- A lender or creditor checks your credit to see if it can offer you a pre-approval.
- A potential insurer reviews your credit.
- You apply for a soft-pull check to see if you are pre-approved.
- A current creditor checks your credit.
Note that in some instances — such as opening a bank account or applying to rent an apartment — credit inquiries could be either hard or soft, and there isn’t a universal rule as to which one will occur. To know for sure, you can ask the bank representative or landlord what kind of inquiry is involved when you apply.
Do Soft Inquiries Appear on Your Credit Report?
You can see the soft inquiries on your credit report, but, in general, your creditors cannot. There are some exceptions, however, but they won’t affect your credit score:
- Soft inquiries from a debt settlement company may be visible to your creditors.
- Soft inquiries from insurance companies may be visible to other insurance companies.
Note that soft inquiries are not disputable and cannot be removed from your credit report after they occur.
No. It doesn’t matter if you have one soft inquiry or 100. They do not have any bearing on your credit score because they are not used in connection with an application for a loan or credit.
What is a Hard Inquiry or Hard Credit Check?
A hard inquiry or hard credit check occurs when you apply for a loan or credit and the lender or creditor views your credit report to make a decision to approve or deny your request. For example, when you fill out and sign a loan application to buy a car it serves as your permission for the lender to check your credit.
How Does a Hard Inquiry Work?
Hard inquiries only occur if you initiate them by applying for a loan or credit. Some situations when a hard credit check occurs are when you:
- Apply for a Personal Loan
- Apply for an Auto Loan
- Apply for a Mortgage
- Apply for a Credit Card
- Apply for a Student Loan
Do Hard Inquiries Appear on Your Credit Report?
Yes. While hard inquiries remain on your credit report for two years, their impact on your credit scores typically starts diminishing after just a few months.
Unlike in the case of soft inquiries, creditors and lenders who pull your credit report can see all of hard inquiries made on your behalf. However, just like soft inquiries, it’s not possible to have a hard inquiry you authorized removed from your credit report.
You can, however, dispute any hard inquiries that were made in error or as a result of identity theft and ask that they be removed from your credit report.
Can Hard Inquiries Impact Your Credit?
Yes, hard inquiries can impact your credit. Each hard inquiry can knock 5 to 10 points off your credit score. However, if you’re shopping around for the best rate on a mortgage or auto loan, most credit scoring models will count all of those inquiries as one — as long as all of the inquiries are completed within the same two-week period.
Even so, losing 5 to 10 points on a borderline score could change your credit rating, such as going from great credit to good credit or good credit to fair credit. However, the change is only temporary.
Should You Be Concerned About Credit Inquiries?
You don’t have to worry about soft inquiries because they never impact your credit score. Instead, it’s hard inquiries that you may need to be concerned about.
If you apply for an occasional loan or credit, you shouldn’t be too concerned about hard credit inquiries. But keep in mind that each hard inquiry can temporarily shave five to 10 points off your credit score unless you’re rate shopping and make all your inquiries within a 2-week period.
On the other hand, if you apply for multiple credit card accounts or loans within a short time, future lenders and creditors may question whether you are having trouble meeting your financial obligations or if you may be at risk for overextending yourself.
Note that inquiries, whether hard or soft, are only added to the credit report that is part of that inquiry. For example, if you apply for a credit card and the creditor does a hard credit check related to your TransUnion report, the inquiry will not show up on your Equifax or Experian credit reports or affect those credit scores.
The Bottom Line
Both hard and soft credit checks are used by businesses and individuals to evaluate your credit. The main difference is that hard inquiries can affect your credit for months, whereas soft inquiries have no bearing on your credit.
Because hard inquiries can affect your credit, it’s important to keep track of them. One way you can keep track is to use a product like ScoreSense. With ScoreSense, you’ll receive three credit reports — one from each of the major credit bureaus. Plus, you’ll receive daily alerts and monthly updates that can help you keep track of your credit, including any hard inquiries.
By keeping track of the hard inquiries listed on your credit report, you’ll know if anyone fraudulently applies for credit in your name, so you can take action. If you’re not already monitoring your credit, why not get started now?