Credit Checks: Hard vs. Soft Inquiries

March 9, 2023

When you apply for a loan or credit card, someone will have to check your credit history before they approve your application. This is so they can judge your ability to pay back the loan.

This check is called a “hard pull”and it's a normal part of your credit file. But you should use these sparingly, because hard credit checks can impact — and even temporarily lower — your credit score.

Luckily, there are times you can use a “soft pull” which does not affect your credit score. In this article, we'll cover the differences between a hard credit pull and a soft one.

Hard Inquiries...

Are part of getting a loan.

There's no way around it, eventually any loan provider will make a hard inquiry before approving and disbursing your credit. These hard pulls are commonly used for applications for mortgages, auto loans, credit card, student loans, personal loans and apartment rentals.

Show up on your credit report.

Not only will show up on your credit report, and will typically remain there for two years. To keep an eye on hard inquiries' impact on your credit, monitor your credit score regularly with tools like the SNB SD Mobile App.

Require your permission.

Lenders can't just access your credit report without your permission. The Fair Credit Reporting Act says only businesses with a legitimate reason can check your credit, and they must have your consent in writing to do it.

Can lower your score.

It's true, hard credit pulls can lower your credit score, especially if you have too many pulls in a short amount of time. However, doing multiple pulls in a two-week period for the same type of loan — like a mortgage — are viewed as a single pull. So you can still shop around to find the best loan for you. 

Soft Inquiries... 

Are an alternative to hard inquiries.

These soft pulls show companies exactly what you would see if you pulled your own credit report. These are commonly used when you apply for a job or insurance; or when a company sends you a "pre-approved offer" for credit. 

Will only show up on your “consumer disclosure.”

Unlike hard pulls, soft checks will not show up on your regular credit report. They are, however, visible on consumer disclosures (credit reports that you request personally), so you will be able to tell if a company ran a soft pull on your credit.

Do not require your permission.

Soft credit checks are accessible to companies without your permission, which is why they are used when a company sends you a pre-approved credit offer. But don't worry, it doesn't affect your credit in any way.

Won't negatively affect your credit score.

This is why it's wise to use soft credit checks, and to limit hard credit checks whenever you can.

Your credit can have a big impact on your financial life. Credit scores and reports provide a snapshot of the financial habits that financial institutions, cell phone companies, credit card companies, and others use to get a sense of your creditworthiness. To learn more, read our blog about how to improve your credit score.

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