Hard VS Soft Inquiries On Your Credit Report.

Understanding credit inquiries

There are a lot of things that you can check using your credit report. One of the most important pieces of information is seeing if anyone has been opening up new accounts or applications in your name. You can find out how this happens, and you should check your credit report at least once a year to ensure there is no fraud going on without you knowing about it.

Check the report in detail

Have you heard of the phrase "pull your credit report?" When you apply for credit – be it your first cell phone plan, the first time applying for a vehicle loan/lease, or applying for your first adult credit card - lenders/creditors will look at your credit report.

This is known as pulling your credit report. As well, there are times when employers and landlords pull files to potentially hire you or lease you an apartment if you’re looking to move. What’s the difference between hard pulls and soft pulls on reports? And what's an inquiry on a credit report anyways?

Credit inquiries

Credit inquiries can be a bit confusing. This is because they have different meanings depending on whether they are soft inquiries or hard inquiries. Soft credit inquiries are when you want to check your own credit, but you’re not going to use this information in any way.

Hard credit inquiries, on the other hand, occur when a creditor/company requests your information from a credit bureau and uses it to make decisions regarding granting you a loan or extending your credit facilities.

What is a soft credit inquiry?

Soft inquiries are routine checks you can do on your own to check your credit score. These do not directly affect your credit score. They're most commonly done by financial institutions for promotional purposes. Some examples include asking for a free credit score, pre-selected loan offers, employment verification or background checks.

What is a hard credit inquiry?

If you’re applying for a loan or credit card, you may have heard of “hard inquiries.” These are checks done by your creditors to gain information about your credit report. They are typically necessary when applying for a large purchase, like a mortgage. If they are done too often in too short of a time frame, however, it can actually hurt your credit score. Too many hard inquiries highlights that you’re taking on more debt than is expected of most people with good enough scores to be approved by credit providers. Big tip: do not put in too many credit applications, especially within a short period of time.

How long does a credit inquiry last?

Credit inquiries for both hard credit inquiries and soft credit inquiries are now visible to lenders. Depending on which bureaus you check, inquiries can now be seen for up to two years.

We know that all consumers want to have the best credit score possible, but many people don’t know the difference between a soft inquiry and a hard inquiry. If you’re looking for a low interest rate, a good credit score is critical to getting the best deal possible.

For more information on credit report inquiries, contact Credit Health.