Subhan Tariq, Esq
Difference Between Hard Inquiry and Soft Inquiry
Updated: Oct 18, 2022
Did you know that credit inquiries drop your credit score? Well, that’s partially true because there are two types of credit inquiries; hard and soft. While one has the potential to affect your credit score negatively, the other is a relatively safe option.
Hard Inquiry vs. Soft Inquiry
A hard inquiry, or hard pull, occurs when you give the lender the right to obtain your credit report and review it during their decision-making process. Upon your permission, they access your entire credit history to determine whether you qualify for the applied loan. This inquiry appears on your credit report for two years and could potentially lower your credit score by a few points. A hard inquiry is required when applying for a mortgage, car, home, etc.
A soft inquiry, also called soft pull, differs in that it does not reveal all the pertinent data of a hard inquiry. A soft pull shows only limited information. Unlike a complex search, it is unauthorized and does not appear on your credit report, and thus, it bears no harm to your credit score. Examples of soft inquiries are checking your credit report regularly, preapproved credit card, or car loans.
A section on your credit report for inquiries shows how many hard inquiries have been made. Multiple queries quickly drop your credit score, and lenders will see you as untrustworthy. It also causes lenders to think that you are in a financial crisis. However, hard inquiries sometimes are unavoidable, but you can always plan and take precautions so they do not affect your credit score.
How to Avoid Hard Inquiries
People who are very much concerned about their credit scores often worry about hard
inquiries. Here is how you can keep your credit score high and prevent hard inquiries. Before applying, check your credit report to see whether you qualify for a particular loan. Apply for credit only when you need it and prepare for it ahead of time. Do not make applications for different loans simultaneously in a short period. For example, multiple inquiries within six months will cram your credit report with inquiries leaving behind a lower credit score.
Lastly, ask your lender if they can make a soft inquiry and request a soft pull on your credit report. In addition, while going through your credit report, if you spot any hard inquiries you did not allow, you have a right to dispute them with the credit agency.