Every time someone checks your credit an inquiry is recorded on your credit report. Hard inquiries affect your credit. Soft inquiries do not. Understanding the difference will help you manage your inquiries, protect your credit, and keep track of who is checking your credit.  

Let’s take a look at hard inquiries, soft inquiries, and how they affect your credit score.

Soft Inquiry vs Hard Inquiry

The Fair Credit Reporting Act (FCRA) guarantees your right to know who is checking your credit. If someone checks your credit, the credit reporting companies list the inquiry on your credit report. Each of these inquiries is classed as a hard or soft inquiry. 

What Is a Hard Inquiry?

A hard inquiry or hard credit check is recorded when you authorize a creditor to check your credit. When you sign an application for a loan or credit card, you authorize a credit check by your lender. A hard inquiry cannot be recorded without your signature.

A hard credit check is recorded when you apply for a new credit line, such as a credit card, auto loan, personal loan, or student loan.

A hard inquiry becomes part of your credit record and will be seen by anyone who checks your credit. It will remain on your credit report for up to two years.

What Is a Soft Inquiry?

A soft credit inquiry can be recorded without your permission. You can see soft inquiries on your credit report, but other people who check your credit don’t see them.

If you ever got a credit card offer in the mail, the issuer probably did a soft credit inquiry to determine whether they wanted to make the offer. 

If you prequalify for a loan, the lender will perform a soft inquiry. If you have a credit counseling session, your counselor will do a soft inquiry.

When you check your own credit, it will register as a soft inquiry on your credit report.

All of these soft inquiries have two things in common: only you can see them on your credit report, and they have no impact on your credit score.

Hard and Soft Inquiries: Some Examples

Let’s look at some ways that hard and soft inquiries can appear on your credit report.

Examples of Hard Inquiries

These are some common ways for a hard inquiry to land on your credit report.

• A credit card application.
• An application for a car loan, student loan, personal loan, or any other loan.
• A credit check before leasing a car.

In each case, you have to sign a document when you apply for credit. This document authorizes the lender to place a hard pull on your credit record. The document will state that you are authorizing a hard inquiry on your credit report (it may be in the fine print).

Examples of Soft Inquiries

Soft inquiries can be registered without your express permission. Here are some examples.

• A credit card company that intends to send you an offer.
• An existing creditor running a periodic check.
• An employer running a background check.
• A car insurance company evaluating your risk.
• You checking your own credit.

These inquiries do not affect your credit, but you may still wish to keep track of them.

Inquiries That Can Be Hard or Soft

Some businesses may perform either a hard or a soft credit check. Be careful in these situations.

• Renting a car.
• Applying for utility service.
• Opening an account at a financial institution.
• Applying for an apartment.

All of these situations involve your signature, so they can involve a hard credit check, though, in many cases, they will only use a soft inquiry. Check the agreement you’re signing to see if you are authorizing a hard credit inquiry. You can also ask before signing.

How Inquiries Affect Your Credit Score

Understanding the impact of inquiries on your credit score can help you to manage your inquiries and protect your credit. 

Remember that if you have a thin credit file with a small number of files and a short history, any new item, including a hard inquiry, will have a greater impact. If your credit record is extensive, you may not even notice the difference!

There are two major types of credit scores: the FICO score that most lenders check and the VantageScore that you get from free providers like Credit Sesame and Credit Karma. These credit scoring models handle inquiries in much the same way.

How Do Hard Inquiries Affect Your Credit Score?

A hard credit inquiry indicates that you are applying for new credit. Applying for new credit indicates that you need credit, which potential lenders could see as an indication of risk. 

If you are applying for multiple credit cards and loans in a short time, it looks like you are desperate for credit. That would make lenders and card issuers reluctant to approve your application.

A single hard credit inquiry is generally a minor issue. It may reduce your credit score by as much as five points, sometimes less. Multiple hard credit inquiries in a short period of time make you look like you’re desperately seeking credit. That can hurt your credit score.

The more recent hard inquiries you have, the greater the impact each new inquiry will have on your credit. Don’t apply for credit unless you really need it, and try to space your applications out. 

There is one important exception to this rule. If you are shopping for a loan or credit card you can make multiple applications and the credit reporting companies will record them as a single hard credit pull, as long as you keep them within a 15-day window. 

If you are planning to apply for a major loan, like a car loan, personal loan, student loan, or mortgage, you may wish to avoid applying for any other credit. Even a small difference in your credit score can mean a substantial difference in the interest rate you are offered.

A hard credit inquiry will remain on your credit report for up to two years, but its impact on your credit score fades quickly. A hard pull has no impact on your credit after one year.

Remember that hard inquiries have a relatively minor impact on your score. They matter but don’t obsess over them. Late payments will hurt your credit more than any number of hard inquiries!

Remember that you have credit reports from three credit reporting companies: Experian, Equifax, and TransUnion. 

If a creditor checks your Experian credit report, the inquiry will appear on your Experian credit report. If they check Equifax, the inquiry will appear on your Equifax report.

Read More About Credit Scores: Credit Score Statistics How to Raise Your Credit Score 100 PointsHow to Add 200 Points to Your Credit ScoreHow to Get an 800 Credit Score

How Do Soft Inquiries Affect Your Credit Score?

A soft credit check has no impact on your credit score, and soft credit checks are not visible to creditors who pull your credit report. They are only there so that you can keep track of who is looking at your credit.

You should still check the soft inquiries listed on your credit report. If there are soft inquiries that you don’t recognize, check the entry on your credit report and consider following up with the organization that made the inquiry.

A soft credit inquiry that you don’t recognize could just mean someone considered you for a prequalified offer. It could also be an initial sign of identity theft.

How to Dispute or Remove Credit Inquiries

Hard inquiries affect your credit, so it’s important to monitor hard inquiries on your credit report. You may spot inquiries that are not legitimate. You can remove hard inquiries from your credit report under two conditions:

• You did not apply for a new credit line.
• You did not specifically authorize an inquiry.

Remember that you may have authorized an inquiry without realizing it. Before you sign any loan application or application involving a payment, check to see if you are authorizing a hard credit inquiry.

A hard pull that you don’t recognize could mean that a company you applied with is doing business under another name or has passed your application to another lender. An application for a store card could show the name of the issuing bank instead of the store’s name. 

A hard inquiry that you don’t recognize could also be an early sign of identity theft. Always check the hard inquiries on your credit reports. If you see one you don’t recognize, follow up immediately.

The record on your credit report should provide a company name, address, and phone number. Call that number and ask why the entry is on your credit report.

If you believe that a hard inquiry on your credit report is illegitimate, you can dispute the record. The credit reporting company is legally obligated to investigate your dispute and give you written notice of their findings.

For detailed instructions on the dispute process, you may visit the dispute centers maintained by Experian, Equifax, and TransUnion.

There’s no point in disputing a legitimate hard inquiry. It won’t be removed, and its impact on your credit is not that serious to begin with.

FAQs

How Can I Minimize the Impact of Hard Credit Inquiries?

You can minimize the impact of hard inquiries on your credit by only applying for credit when you need it and by spacing out any new credit applications. Avoid multiple credit inquiries: Try not to apply for more than one new credit line in any six-month period. 

If you are shopping for a loan or credit card, keep all your inquiries within a 15-day window. The credit bureaus will recognize that you are shopping and record only a single hard inquiry.

You can minimize the impact of hard inquiries by taking steps to improve your credit. Keep a good payment history, watch your credit utilization rate, and consider using a credit builder loan or other credit building products. 

How Long Does a Soft Inquiry Last?

A soft credit pull will remain on your credit report for 12 months.

How Long Does a Hard Inquiry Last?

A hard inquiry will remain on your credit report for two years but will have no impact on your credit score after the first year.

How Many Hard Inquiries are Too Many?

There’s no set rule for how many hard inquiries are too many. One hard inquiry can cause up to a 5-point drop in your credit score. The more you add, especially in a limited time period, the greater the impact will be.

The impact of hard inquiries will be greater if you have a thin credit file with a limited number of records and a relatively short credit history. Even a small change in your credit score can have a significant impact on the terms you are offered on new credit accounts.

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