Soft vs. Hard Inquiries? What’s the Difference?

Credit inquiries come in two flavors: soft and hard. Here’s how each kind affects you.

Inquiries, soft or hard, are authorized requests to see your credit report. But the similarities end there.

Soft Inquiries

A soft credit inquiry is sort of a more routine credit check that can be done without your permission. Examples include when:

  • A lender you currently do business with requests your report to make sure you’re still creditworthy
  • You check your own credit report

The key takeaway for soft inquiries is that they won’t affect your credit score because they’re not applications for credit.

Hard Inquiries

A hard inquiry happens when a potential lender requests your credit report to help evaluate whether to offer you credit. Examples include applying for a:

  • Mortgage
  • Car loan
  • Credit card

Why inquiries matter

Though soft inquiries will show up on your credit report, they will have no effect on your perceived creditworthiness. Hard inquiries, on the other hand may be factored into credit scoring models. Though hard inquiries are generally seen to have a negative effect on credit scores, the impact of each inquiry isn’t usually too big. However, too many hard inquiries on your credit report may drag your credit score down, especially over the shorter run.

Here’s the good news on hard inquiries: they’ll fall off of your credit report after 2 years. Also, if you make a certain amount of hard inquiries within a short period of time when you’re loan shopping for a single purchase (like a mortgage), credit scoring models will generally consider all those hard inquiries to be one inquiry – they don’t want to penalize you for shopping around for the best deal.

Bottom line, don’t worry about soft inquiries, but keep an eye on your hard inquiries.

Take the next step: protect your credit and start saving money.