Hard vs. Soft Credit Inquiries

A hard inquiry happens when you apply for credit and a lender pulls your report to make a decision. It can lower your score slightly: FICO says fewer than five points for most people. A soft inquiry happens when you check your own credit, or when a company looks at your file for reasons other than a credit application, and it doesn’t affect your score at all.

What causes each one

Usually hard:

• applying for a credit card, including a store card at checkout
• applying for a mortgage, auto loan, personal loan or student loan
• asking for a credit limit increase (some issuers use a soft pull, so ask)
• some apartment applications and cell phone contracts

Usually soft:

• checking your own score or report, in any app
• “prequalified” or “preapproved” offers
• an existing lender reviewing your account
• many employment background checks (which need your permission)

Not every company uses the same terms, so if it matters, ask: “Will this be a hard or soft pull?” Prequalification tools are often soft, but the formal application that follows is hard.

How much a hard inquiry matters

Less than people fear. A hard inquiry stays on your report for up to two years, but FICO scores only count it for the first 12 months. For someone with a long, healthy credit history, one inquiry is a small bump. It matters more if your file is thin, because there’s less else for the model to look at.

Several applications in a short period add up, though, and to a lender they can look like financial stress. Spacing out card applications is sensible, especially in the months before a mortgage.

Rate shopping won’t wreck your score

For mortgages, auto loans, and student loans, FICO treats multiple inquiries within a short window as a single inquiry, because it assumes you’re comparing rates for one loan. Newer FICO versions use a 45-day window; older ones use 14 days. FICO also ignores these loan inquiries entirely for the first 30 days.

So if you’re buying a car, do all your financing applications within a week or two. That shopping window does not apply to credit cards. Five card applications in a month count as five inquiries.

Spot inquiries you didn’t make

Check the inquiries section of each credit report once or twice a year. Some names will look odd because lenders sometimes use a parent company or a processing company’s name. If an inquiry still makes no sense, call the company that made it.

A hard inquiry you didn’t authorize can be an early sign of identity theft. Dispute it with the bureau, freeze your credit (Credit Freeze vs. Fraud Alert explains how), and check for any new accounts. Credit Card Security and Fraud Prevention covers other precautions.

Don’t avoid checking your own credit

Checking your own score or report never hurts it. You can get free weekly reports from all three bureaus at AnnualCreditReport.com, and looking regularly is the best way to catch errors before a lender does. How to Check Your Credit Score for Free lists the options, and Understanding Credit Score explains why payment history and balances matter far more than inquiries.

Sources

• myFICO: Does checking my credit score lower it?
• Experian: What is a hard inquiry and how does it affect credit?
• FTC: Free credit reports

This article is for educational purposes and is not financial advice.