It’s likely that you’ll experience a hard credit inquiry or soft credit inquiry at some point in your life — probably multiple times, especially in the case of the latter. However, not everyone knows the difference between hard credit inquiry and soft credit inquiry — or that they should watch out for unauthorized credit inquiry.
There are two primary credit scoring models (FICO scores and Equifax/Experian/TransUnion scores), so most people actually have two credit scores, although they remain relatively similar (one will never be far off from another). Whether or not you’re seeking financial assistance or loans, it’s a good personal finance habit to regularly check your own credit scores.
If you’re applying for credit cards, car insurance rate shopping, or trying to take out certain types of loans, these actions can affect your credit scores. However, the ways they affect your scores are individually different, and it’s these variations that make up the basis of hard credit inquiry vs. soft credit inquiry.
Hard Credit Inquiry
Hard credit inquiry and soft credit inquiry are similar in that both involve someone else checking your credit score. However, hard credit inquiries happen when you are applying for credit, seeing if you qualify for loans, or checking out different insurance or interest rates.
Here are some times you might experience a hard credit inquiry:
- From credit bureaus while you’re applying for credit cards
- From loan providers or financial institutions when you’re applying for a certain type of loan; for instance, student loans, auto loans, or personal loans
- From mortgage lenders as part of a mortgage application or home loan
- From property managers or landlords as part of an apartment rental application
While it may seem concerning that a hard credit inquiry remains on your credit history for 2-3 years, a single hard inquiry shouldn’t be too much of a concern as it only drops your score by a few points. However, that does not mean you are free to stop worrying about them. Financial institutions sometimes see you as a risky spender or a worse candidate if you have a lot of hard credit inquiries on your credit report. In addition, shopping around excessively can make you look like you aren’t inquiring after offers seriously, which some loan companies find to be a red flag.
Soft Credit Inquiry
A soft credit check, or soft credit inquiry, is the more common form of credit inquiry. Soft credit checks do not impact your credit scores. If you ever receive mail saying that you’re pre-approved for a certain credit card or loan, it’s because the financial institution or lender checked your credit score.
Another difference between hard credit inquiry and soft credit inquiry is how each kind of inquiry on your credit shows up on your report. Soft credit inquiries do not stay on your credit report for anyone except you to view (some soft credit inquiries don’t even show up on your credit report at all).
The following are some times when you might experience a soft credit inquiry:
- Employment/background checks
- Credit card offers you are “pre-qualified” or “pre-approved” for
- Insurance offers you are “pre-qualified” or “pre-approved” for
- Checking your own credit scores
Credit Inquiry Scams
In today’s world, with a wealth of knowledge available just a few clicks away, not knowing the differences between a hard credit inquiry and a soft credit inquiry might not seem like a big deal. Unfortunately, many people still don’t research these different types of inquiries and how they affect credit scores. This means that less-than-honest financial institutions and shady loan companies prey on people’s lack of knowledge, and sometimes it will result in an unauthorized hard credit inquiry or other concerning credit pull. If the damage to your credit is serious or you have experienced financial loss as a result of this situation, contact a credit report attorney as soon as possible.
Get the Credit You Deserve
When you’re dealing with credit inquiry problems, suspect you might be involved in a credit scam, or have other credit report problems, you can rely on Garibian Law Offices to fight for you. We’ll make sure you get the justice you deserve.