Hard Inquiry vs. Soft Inquiry: What’s the Difference?

Understanding credit inquiries is essential when managing your credit health. Both hard and soft inquiries appear on your credit report, yet they differ in purpose and impact. Let’s explore the key differences in a hard inquiry vs. soft inquiry, including when each type occurs and how they affect your credit score.

What Is a Hard Inquiry?

A hard inquiry, also known as a hard pull, occurs when a lender checks your credit report to assess your creditworthiness. Hard inquiries are associated with applications for credit cards, loans, or lines of credit and can temporarily lower your credit score.

Common Situations for Hard Inquiries

Hard inquiries occur when you actively seek new credit or financing, such as:

• Applying for a credit card: Every credit card application triggers a hard inquiry.
• Car financing or leasing: Whether it’s through a dealership or bank, auto loans involve a hard pull.
• Mortgage application: Both the initial mortgage application and the pre-closing credit check include hard inquiries.
• Personal or student loans: Lenders do a hard inquiry when assessing eligibility.
• Credit line increase requests: Some credit card issuers perform a hard pull to determine your credit limit increase eligibility.
• Apartment rental applications: Some landlords may perform hard inquiries as part of the tenant screening process.

How Long Do Hard Inquiries Stay on Your Report?

Hard inquiries remain on your credit report for up to two years, though the impact on your credit score usually lessens after a few months. A single hard inquiry typically lowers your score by fewer than five points, but multiple inquiries over a short period can add up, creating a more significant decrease.

Credit scoring models generally treat rate-shopping inquiries for auto loans, mortgages, and student loans as a single inquiry if they occur within a set timeframe—45 days for newer models and 14 days for older ones.

What Is a Soft Inquiry?

A soft inquiry, or soft pull, happens when someone checks your credit for non-lending reasons. Unlike hard inquiries, soft inquiries do not affect your credit score and may occur without your permission.

Common Situations for Soft Inquiries

Soft inquiries happen in situations where credit is reviewed without direct lending purposes:

• Checking your own credit report: Viewing your credit generates a soft inquiry.
• Loan prequalification: Some lenders conduct soft pulls to provide prequalification offers or rate quotes.
• Promotional offers: Some companies pre-screen consumers for credit offers.
• Employment background checks: Employers may conduct soft inquiries when hiring.
• Utility applications: Setting up utilities at a new address may involve a soft inquiry.
• Insurance quotes: In some states, insurance companies conduct soft pulls to determine premium costs.

How Long Do Soft Inquiries Stay on Your Report?

Like hard inquiries, soft inquiries stay on your report for up to two years but have no impact on your score. Because soft inquiries are unrelated to lending applications, they are not considered risky behaviors and don’t influence credit score calculations.

Hard Inquiry vs. Soft Inquiry: What’s the Difference?

In comparing a hard inquiry vs. soft inquiry, both appear on your report, but only hard inquiries impact your credit score. Hard inquiries are triggered by credit applications and need your consent, whereas soft inquiries occur without affecting credit scores. Understanding these distinctions helps you manage your credit profile effectively.

How to Minimize Credit Inquiries

While a hard inquiry will rarely, if ever, be the sole reason you’re denied credit, it’s still wise to be mindful of hard inquiries that appear on your report. Soft inquiries, however, have no impact on your credit, so it’s best to prioritize them when possible.

Here are some tips to manage inquiries effectively:

• Get prequalified: Many lenders offer prequalification checks using soft inquiries, letting you explore options without affecting your score.
• Use the rate-shopping window: Apply for mortgage, auto, or student loans within a designated period (14-45 days) to combine multiple inquiries into one, minimizing credit impact.
• Limit credit card applications: Credit card applications each count separately, so avoid applying for multiple cards within a short period.
• Monitor your credit regularly: Reviewing your credit reports can help you identify unauthorized inquiries and stay aware of your credit health.

Can You Remove Hard Inquiries?

You can’t remove legitimate hard inquiries from your reports, but if you spot an unfamiliar inquiry, it may be a red flag. Here’s how to respond:

1. Contact the creditor: Reach out to the company to verify legitimacy.
2. File a dispute: Dispute unauthorized inquiries with the credit bureau to remove them.
3. Consider a fraud alert: Add a fraud alert to prevent further unauthorized inquiries or accounts.

Stay Informed About Your Credit

Knowing the difference between a hard inquiry vs. soft inquiry is essential for managing your credit. By understanding when each occurs and its effects, you can make informed credit decisions, protect your score, and maintain a strong financial profile.

If you ever need expert assistance or guidance on your credit journey, don’t hesitate to reach out to the Nerds! Additionally, stay updated with the latest tips and information by following us on Facebook, Instagram and TikTok!