Soft Credit Checks and Hard Credit Checks: What You Need to Know

What does it mean when a creditor “pulls your credit”?

Well, the potential lender wants to see your creditworthiness. They pull your credit report to analyze things like your payment history and debts owed.

Sounds simple enough. But did you know there are actually two types of credit checks? Creditors either do what’s called a soft credit check (or a soft inquiry) or a hard credit check (also called a hard inquiry).

Whether you want to build credit or plan to borrow money, you should know what soft and hard credit checks are, how they’re different, and how they affect your credit score. That way, you can approach credit checks properly and take better control of your finances.

What are soft and hard credit checks?

Think of your creditworthiness as a pie with many different slices that, taken together, are your credit score.

For example, your FICO score (a widely-used credit score) is determined using various factors, such as amounts owed, payment history, credit mix, length of credit history, and even new credit:


Now, let’s take a look at a single slice of this FICO pie: New Credit.

Part of your credit score is determined by whether you’ve recently applied for an auto loan, personal loan, credit card, or another type of credit. This is where soft and hard credit checks become important.

Before offering you credit, or even before you apply for credit, a lender may perform:

  • A soft credit inquiry: Soft inquiries, or soft pulls, serve as a background check tool and personal reference. They can be done by:
    • A credit card issuer seeing if you qualify for a card
    • A company planning to hire you (to see if you’re responsible)
    • A landlord checking your financial standing
    • An insurer who wants to show you pre-qualified insurance quotes
    • Us. When you request a loan with Finzmo, we do a soft credit inquiry to get results from our network of lending partners.
    • You. When you check your credit score through a credit card issuer, major credit bureau, or elsewhere, you’re doing a soft inquiry.
  • A hard credit inquiry: Hard inquiries, or hard pulls, occur when you apply for credit. Your potential lender pulls your credit to assist with the decision-making process. Hard inquiries can occur during:
    • Mortgage applications
    • Auto loan applications
    • Personal loan applications
    • Student loan applications
    • Credit card applications

Key differences between soft and hard credit checks

Soft credit checks serve as sort of a background check on your finances. Hard credit checks contribute to a lender’s decision-making process.

1. Soft credit checks don’t impact your credit score. Hard credit checks do.

Soft inquiries don’t damage your credit. That’s because you’re not applying for new credit. On the other hand, hard pulls do affect your credit score.

Since lenders do a hard pull when you apply for credit (i.e., submit an application), that shows up on your credit report. And it can negatively affect your credit. The average person loses 5–10 points on their credit score for a hard inquiry, according to Experian, one of the most popular credit bureaus.

But why?

Well, when you apply for new credit, it’s typically a signal that you lack cash flow, have mounting debt, or are overspending. And as the FICO pie chart shows, opening new lines of credit accounts for 10% of your credit score. So the more new credit you apply for, the greater the negative effect from hard credit checks.

For example, many hard credit checks within a short period of time could drop your credit score a lot. That will signify to lenders that you could be mismanaging your finances. Now, it could be that you’re rate shopping for an auto loan. If that’s the case, major credit bureaus will recognize this.

As Experian notes, multiple hard inquiries for the same kind of credit affect your credit score less than multiple, separate inquiries do different kinds of credit.

2. Hard credit checks require your knowledge or authorization

When a lender performs a hard inquiry, they’ll ask for your approval or at the very least notify you. The lender must get your permission to perform a hard credit check.

On the other hand, soft inquiries can be done without your knowledge, as you’re not actually applying for credit. You can see soft inquiries on your credit report so you know who’s checking your information.

Taking control of credit checks and your credit

Hard inquiries stay on your credit report for more than two years. While the impact on your score lessens over time, check your credit report to ensure only hard inquiries that you authorized are showing up.

If you find any unauthorized hard inquiries on your report with any of the major credit bureaus, dispute it. Read our post on how to remove inquiries from your credit report. Not only do unauthorized hard inquiries lower your score, but they could also be a sign of fraud or identity theft. If you need assistance with your dispute, contact the Consumer Financial Protection Bureau (CFPB).

Your credit score directly affects your ability to finance important things in your life, such as an education, a car, or a house. If you have bad credit, it can decrease your quality of life and make it hard to achieve financial security. That’s why you it’s important to know the difference between hard and soft credit checks.

But it’s also important to know that a credit score involves so much more than credit checks. As an article in Bankrate states, the fastest way to boost your credit score is to pay your bills on time and lower your credit utilization ratio. These two factors account for 65% of your credit score.

If you educate yourself and pay attention to your credit report, you can take control of your personal finances. Ensure hard and soft credit checks don’t affect your score any more than they should.