soft credit check vs hard credit check

The Difference Between a Soft vs. Hard Credit Check

June 30, 2021 3:09 pm Published by

When trying to build or improve a credit score, most consumers focus on the biggest contributor: paying bills on time, which is about 35% of a score. However, other factors contribute to a credit score. These include credit utilization, or how much credit you’re using vs. what has been extended to you (this makes up 30% of your score), length of credit history (15%) and types of credit (10%). The final 10% of a credit score is made up of credit inquiries, and while this might not account for the largest portion of the score, the wrong types of inquiries can drag down the good efforts spent building your score.

There are two broad categories of credit inquiries or checks: hard and soft. A hard credit inquiry occurs when you apply for a credit card, mortgage, or other type of loan and the lender checks your credit before approving you. A soft credit check occurs when you receive an offer from a lender, such as a pre-approved credit card offer in the mail, or even when you check your own credit. 

For anyone interested in improving their credit score, or even understanding more about the credit industry, it’s important to understand the difference between a soft vs. hard credit check.

Soft Credit Checks

The biggest difference between the two is that soft inquiries do not affect your credit score, while hard inquiries do. Another distinction is that soft credit inquiries are usually not initiated by a consumer but rather by a lender that is trying to win your business. Soft inquiries include the following:

  • Pre-approval offers from credit card companies (again, that you did not seek out)
  • Credit limit increases or decreases on your credit cards that you did not request
  • Employer credit checks
  • Checking your own credit by requesting reports from the bureaus or scores from other providers

Hard Credit Checks

Hard inquiries are performed when you apply for any type of loan or credit card and the lender checks your credit history before granting or denying the loan. Hard inquiries include applications for the following:

  • Credit card
  • Car loan
  • Mortgage
  • Renting an apartment
  • Initiating mobile phone or utility service

Too many hard inquiries can be a negative hit to a credit score. They stay on your credit report for about two years. While they aren’t as detrimental to a credit score as missing payments or defaulting on a loan, too many hard inquiries in a short period of time gives lenders a negative impression because it demonstrates that you are having difficulty securing credit and you might be a credit risk. 

Knowing Whether an Inquiry is Hard or Soft
A hard credit inquiry is commonly made clear to the borrower because a consent form usually needs to be signed. By signing a credit report authorization form, a consumer is giving the lender permission to pull a credit report and perform a hard credit inquiry with the purpose of seeking credit at that moment. 

While lenders can pull soft inquiries at various times without the consumer’s knowledge, there is more intent on the part of the consumer when a hard inquiry is made because credit is needed at that moment.

Why Do Credit Inquiries Matter?

Companies need a way to determine your level of financial responsibility and ability to pay back a loan. A credit check helps them do this, though your credit is not the only factor in extending you a loan. 

It’s also important that the credit bureaus have made credit inquiries a separate standalone category when formulating a credit score. This is helpful for borrowers and consumers in general, because it provides them with additional knowledge or insight into the number of credit inquiries, most likely of the hard category, that have been made to their credit history.


TheBalance – The Difference Between Hard and Soft Credit Inquiries (And Why They Matter) – How credit inquiries affect your credit score

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This post was written by David B. Coulter

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