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

When someone, including you, looks at your credit file, that’s an inquiry. There are two varieties of inquiry: hard and soft. One affects your credit scores, and the other doesn't.

Understanding the differences between hard and soft inquiries can expand your credit know-how and help you navigate loans and credit to build the kind of financial life you want. 

What Is a Credit Inquiry?

A credit inquiry, also known as a credit check, is when you or someone else asks (inquiries) to review your credit history. 

Lenders use credit inquiries to view your credit reports, which list information about your debts. 

Credit checks can tell lenders:

• Whether you've had any late or missed payments on your debts

• What types of credit you have

• How much debt you owe, and what your credit limits are

• Your credit age (how long you've used credit)

• How often you apply for new credit

A credit inquiry is categorized as hard or soft. Who does the credit check, and why, determines which one it is. 

What Is a Soft Inquiry? 

A soft inquiry or soft pull is a credit check that isn't linked to an application for credit. Soft pulls can be done by you or someone else. 

Here are some examples of soft pulls:

• You download a budget app that includes free credit monitoring, which you use to check your credit monthly.

• A credit card company wants to send you pre-screened offers for credit, so they perform a soft inquiry. 

• You want to get a loan but would like to check rates beforehand, so you get quotes from a lender that doesn't require a hard pull. 

Can soft inquiries affect my credit score? No, though they can show up on your credit reports. 

You can check your own credit as often as you like without any impact on your score. 

What Is a Hard Inquiry?

A hard inquiry is a credit check that happens when you apply for credit. Hard inquiries are checks done by someone other than you, and in most cases, they require your permission. 

Here are some examples of hard pulls:

• You apply for a home equity line of credit. The lender pulls your credit file to help decide whether to approve your application.

• You request an increase of your credit card limit, which requires a hard credit check. 

• It's time to buy a new car, so you apply for a loan, and that requires a hard pull. 

Do hard inquiries hurt my credit score? Each hard inquiry could cost you a few credit score points, but they do less damage than late or missed payments. For most people, a single inquiry takes five points or less from credit scores. 

How long do hard inquiries stay on my credit report? Two years. The upside is that FICO credit scores, which 90% of top lenders rely on for approval decisions, only count hard inquiries from the last 12 months when calculating your scores. Also, the impact of each hard inquiry diminishes over time.

Legitimate hard inquiries can't be removed from your credit reports, but you can dispute any you believe are fraudulent. Contact the lender listed on the credit report to see if they made the inquiry. If they didn't, report it to the Federal Trade Commission (FTC) and dispute your credit report with the credit bureaus. 

Key Differences Between Hard and Soft Inquiries

The main differences between hard and soft inquiries are who does them and how they affect your credit standing. 

• Soft pulls happen when you check your credit (or someone does a soft review for pre-screened credit offers or employment).

• Hard pulls are when someone (typically with your authorization) checks your credit when  you apply for credit. 

• Soft inquiries don't impact credit scores.

• Each hard inquiry has the potential to knock a few points off your credit scores.   

Why do you need to know the difference? Because your credit health matters. 

Too many hard inquiries on your credit report could weigh down your credit scores and make it more difficult to get approved for loans. 

How many hard inquiries are too many? There's no set number that qualifies as too many inquiries. But inquiries do matter. Someone who recently applied for several accounts could be struggling financially. Statistically, people with six or more inquiries on their credit reports are more likely to declare bankruptcy than people with zero inquiries. Bottom line: The more inquiries you have, the riskier you could appear to lenders. 

Do Debt Settlement Companies Check Your Credit? 

Debt settlement offers help to people when they are overwhelmed by debt. If you qualify, you could get rid of your debt for less than what you owe and get to a better financial situation faster than by making minimum payments.

So, do debt settlement companies check my credit? 

They may do so to:

• Identify the debts you owe

• Clarify the details of your debt, including the type of debt, the amount owed, and your account status

• Prioritize which debts to focus on first

A debt settlement company may perform a soft pull initially to see if you're a good candidate for help. Then, once you formally enroll in a debt settlement program, they're likely to follow up with a hard credit inquiry to get a more complete picture of your debt situation. 

Tips to Manage Credit Inquiries Wisely

If one of your goals is to improve your credit scores, it's important to know how to manage hard and soft inquiries. 

How can I minimize the impact of hard inquiries? 

Here are a few tips: 

• Only apply for credit when you truly need it. Otherwise, you could end up with an unnecessary hard inquiry on your credit reports. 

• Use prequalification and pre-approval tools. They can help you test the waters on what kind of loans you might qualify for, but without a hard credit pull. 

• Rate-shop to minimize inquiries. For mortgages, car loans, and student loans, you can shop around to get the best deal without excessive harm to your credit score. Inquiries from those types of creditors are ignored for 30 days. Then, all inquiries from lenders with the same classification (i.e., mortgage lenders) within 14 to 45 days are counted as a single inquiry. 

Whether you get 14 or 45 days depends on which credit score is being calculated, and it’s hard to know which score a lender will rely on. So your safest bet is to rate shop within a 2-week timeframe.

Stay on Top of Your Credit Inquiries

It's good to keep an eye on credit inquiries and your credit reports as a whole. If you see an inquiry you don't recognize, that could be a tip-off that someone has attempted to open a fraudulent account in your name. 

Here are a few more tips to help you stay on top of credit inquiries: 

• Check your credit regularly. You can get your credit reports for free weekly from each of the three major credit bureaus by visiting AnnualCreditReport.com. You can also use a budget app to monitor credit, if that feature is built in. 

• Don't panic if you see a lot of soft inquiries. Soft inquiries can land on your credit report, but they don't affect your score so you don't need to stress over them. 

• Opt-out of pre-screened credit offers. Opting out means fewer soft credit pulls on your reports and less junk mail for credit cards or loans you don't need or want. 

• Question inquiries you don't recognize. If you see a hard inquiry but haven't applied for credit, reach out to the lender listed on your credit report. Dispute inquiries with the credit bureaus if you suspect fraud.