In today’s world of credit and loans, understanding the difference between a soft pull and a hard pull credit inquiry can be crucial. When assessing your creditworthiness, lenders use these inquiries to gather essential information that helps them make an informed decision. However, it’s important to know that not all inquiries are equal. This article will explain the differences between a soft pull and hard pull credit inquiry, as well as their impact on your credit score.

Soft Pull Credit Inquiry

A soft pull, also known as a soft credit check or soft inquiry, occurs when a creditor or potential lender views your credit report in order to assess your creditworthiness, without impacting your credit score. This may happen when you:

1. Check your own credit score or report

2. Apply for a pre-approved offer

3. Receive a background check from an employer or landlord

These inquiries are often used to verify specific information about you requested by third parties and are not visible to other creditors when they access your credit report.

Hard Pull Credit Inquiry

A hard pull, also called a hard credit check or hard inquiry, is conducted when a potential lender assesses your entire credit history to see if you qualify for their product or service. Hard pulls usually happen when you:

1. Apply for loans (auto loans, mortgages, etc.)

2. Open new lines of credit (credit cards)

3. Request an increase in your current line of credit

Unlike soft pulls, hard inquiries have a direct impact on your credit score and can potentially decrease it by several points. They are visible to other creditors when they access your report and can remain visible for up to two years.

How They Affect Your Credit Score

While soft pulls have no impact on your credit score, hard pulls can have negative effects if you accumulate too many within a short period of time. When lenders see multiple hard inquiries on your credit report, they may view this as a sign of financial distress and become more reluctant to offer you credit.

To avoid hurting your credit score, it is essential to be mindful of how many hard pulls you engage in within a short time frame. It’s always a good idea to space out your loan applications or other instances that require hard inquiries by at least six months to minimize any potential damage to your credit score.

The Bottom Line

Now that you understand the difference between a soft pull and a hard pull credit inquiry, you can make better financial decisions when applying for loans, credit cards, or any other instance where your credit history may be assessed. Keep track of your hard inquiries and remember that responsible borrowing behavior and timely payments are the best ways to maintain or improve your credit score over time. So, the next time you’re faced with an opportunity that requires a credit check, consider whether it is classified as a soft pull or hard pull inquiry, and plan accordingly in order to protect your financial well-being.