Hard vs. soft credit checks: What to know

A lender checking your credit can trigger a hard credit inquiry, which can negatively affect your credit score.

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as "Credible" below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

Hard credit checks appear on your credit report and can affect credit scores. (Shutterstock)

When you apply for credit, lenders want to know that you can repay your debt — so they’ll take a look at your credit history. 

A soft credit inquiry is a high-level look, and doesn’t affect your credit. But a hard credit check is a deeper dive, and it can affect your credit score. It’s important to note that no one is supposed to look at your credit without your consent.

Here’s what to know about hard credit checks, when a lender might do one, and how it can affect your credit. 

Credible makes it easy to compare rates from multiple lenders for student loans, home loans, personal loans, and credit cards — without affecting your credit.

Hard credit check vs. soft credit check

Companies might want to look at your credit in many situations. They can do this with two types of credit checks — soft credit checks and hard credit checks. 

Soft credit checks usually happen when you apply for a pre-approved offer, a lender does an account review, or the company looking at your credit isn’t a lender. A soft credit check doesn’t affect your credit score. You’ll often come across soft credit checks when someone needs to run a credit check for something other than lending money. 

On the other hand, a hard credit check can negatively affect your credit score, although the impact isn’t substantial and will probably be brief. You’ll likely encounter a hard credit check when you apply for credit products, such as a credit card, loan, or line of credit. A hard credit check can remain on your credit report for up to two years, whereas soft credit checks don’t appear on your credit report at all.

Examples of common hard credit inquiries

A few situations can lead to hard credit inquiries, including:

  • Applying for credit products such as a personal loan, credit card, or mortgage
  • Submitting a rental application for an apartment
  • Requesting a credit limit increase, depending on the lender
  • Opening a new service account, such as phone or internet

You can compare rates from multiple lenders without affecting your credit when you use Credible.

Examples of common soft credit inquiries

Soft credit pulls occur when the credit check isn’t being run during an application for borrowing money. For example:

  • A utility company may use a credit check to decide if you need to put down a security deposit.
  • Auto insurers may consider your credit score when determining your insurance premium.
  • Some employers run credit checks as part of a background check during the application process.

How to dispute hard credit inquiries

Its good practice to review your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) regularly to check for mistakes and to get a sense of how you can improve your credit score

It’s possible for a hard inquiry to appear on your credit report without your consent.  Finding an unapproved hard credit inquiry on your credit report can be a sign of criminal activity, such as identity theft. Because hard credit inquiries can hurt your credit score, it’s important to have inaccurate or unauthorized ones removed. 

Credit reports usually contain a contact section that tells you how to reach out to the creditor that conducted the hard credit inquiry. It’s important to note that if you don’t recognize a creditor, it’s not necessarily a sign of identity theft. The creditor could be a partner to a business you did, in fact, apply for credit with. Some retailers that offer credit cards may have a lending partner, and car dealerships can work with outside parties to issue auto loans. 

If a credit issuer made a mistake, you can work with it and the credit bureau to fix the error that appeared on your credit report. If you confirm that the hard credit inquiry is related to fraudulent activity, you can take steps to have the inquiry removed from your credit report:

  • Report the criminal activity to law enforcement agencies.
  • Place a fraud alert or security freeze on your credit reports to protect them until the issue is resolved.
  • Dispute the inquiry with the credit bureau that created the credit report in order to have it removed from your report.

Why hard inquiries matter

Hard credit inquiries are often necessary when you want to borrow money, but it’s best to avoid unnecessary ones as they can hurt your credit score. 

To keep your credit score healthy, avoid applying for multiple new credit products, such as loans or credit cards, back to back. Some credit-scoring models will count multiple hard credit inquiries as one inquiry if they’re for the same type of credit product made in a short period of time.

For example, it might not be a good idea to apply for a credit card, personal loan, and auto loan at the same time, as those three loan applications would count as three different hard inquiries. But if you’re rate shopping for a personal loan, you could apply with three different lenders to see which will give you the best rates and terms — and that would count as a single hard inquiry, provided they happen in a short time frame. If possible, limit your shopping period to just two weeks. That said, FICO offers a bit more leeway for auto, mortgage, and student loans by giving you 30 days to shop around without dinging your credit score multiple times.

When lenders see multiple hard inquiries on a report in a short time period, they may think you’re experiencing financial distress. This could make them less likely to lend to you, or more likely to offer you higher interest rates.

Hard inquiries can hurt your credit score, but their negative effect is rarely significant and doesn’t last forever. In fact, one additional credit inquiry reduces credit scores by less than five points, according to FICO. Hard inquiries typically drop off credit reports after two years, but FICO scores only consider inquiries from the last 12 months.

Inquiries represent only 10% of your credit score, according to FICO. Your payment history and overall amount of debt have a much greater impact on your credit score.

Rate shopping doesn’t affect your credit when you use Credible to compare multiple lenders.