Credit Pulls: Hard vs. Soft Inquiries
We’re giving you the 411 on credit inquiries, because knowing how they affect you is a big part of being financially healthy. When you apply for a credit or a loan a creditor will “pull” your credit. This check is called a hard inquiry – but there are also soft inquiries, too. A soft pull, or soft inquiry, happens when someone checks your credit report, like in the case of a pre-approved credit card offer. Unlike a hard pull, a soft pull does not impact your credit score.
Soft Inquiries
A soft inquiry occurs when someone, or a company, checks your credit report. These pulls aren’t anything to worry about. Here are some of the most common examples of soft inquiries:
- A credit card company pre-approves you for a card.
- You check your own credit score.
- Employment verification
- Insurance quotes
You can see soft inquiries on your credit report, even though they don’t affect your score. To check what inquiries have been made, you’ll need to check your reports from all three credit bureaus.
Hard Inquiries
Hard pulls are the inquiries you should keep an eye on. They can stay on your credit report for up to two years and can lower your credit score. Typically, hard inquiries don’t impact your score by much, often just a few points. However, as long as you don’t apply for multiple loans and credit for months straight, the impact of hard pulls is usually not that bad.
Here are a few things to remember about hard inquiries:
- They are commonly used for applications for mortgages, auto loans, credit cards, student loans, and personal loans.
- Your consent is required in order for companies to pull your report.
- Hard inquiries can lower your credit score, especially if you have several pulls in a short time period.
Do One Thing…
Check your credit reports at all three bureaus regularly. Checking your credit reports should be a habit. It’s free and will help ensure accuracy and prevent identity theft. You can also keep your credit score high by catching and reporting incorrect information to the credit bureaus. You can check your credit report for free within online banking.
Post Author: Jean Chatzky & Chris O’Shea
The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.
Information published by SavvyMoney.