What is the Difference Between a Soft and Hard Credit Inquiry?

Written by Christina Miller
Edited by Carly Simon-Gersuk

The Difference Between a Soft and Hard Credit Inquiry

Credit score. This number can often seem mysterious and complicated, and is the subject of certain myths and much confusion. For something that has a large effect on daily life (you can’t get a good mortgage rate, car loan rate or credit card APR without a solid score), it often seems as though we have little control.

To dispel a common myth right off the bat, checking your own credit score does not lower your credit. There are two different types of credit inquiries – hard and soft. A hard inquiry occurs whenever you apply for credit and a soft inquiry is when you access your own credit report, when an institution pulls it for a pre-approval, or when a potential employer runs a background check. While soft inquiries don’t affect your score, hard credit inquiries are one of a number of factors that impact your credit score.

Hard Inquiries

Every time you apply for credit (i.e. a credit card, auto loan, mortgage, etc.) the lender pulls your credit report in order to determine whether you qualify for the loan and what your interest rate will be. In order for a hard inquiry to be made, the potential creditor requires your authorization. This “hard inquiry” is subsequently reported in your credit report, indicating that you have applied for credit, and will have an effect on your score. The inquiry will remain on your credit report for 2 years and will be visible to anyone who does a hard or a soft pull, but it will not affect your score after 12 months. A good tip from Myfico.com is that all inquiries within a 45-day period are considered one inquiry for the purpose of your credit score, so when you are applying for credit, use this as a strategy.

Let’s take a quick look at why hard pulls negatively affect credit scores. According to Myfico.com, hard pulls negatively affect credit score as, “large numbers of inquiries means greater risk,” to the lender. The correlation between individuals with a high number of credit inquiries and the likelihood of declaring bankruptcy is strong; people with six or more inquiries on their reports (this is 6+ hard pulls in 2 years) can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. Note, that it is a matter of correlation and not causation, and a hard credit inquiry is not inherently bad.

Soft Inquiries

Soft inquiries differ from hard inquiries primarily in that they do not adversely affect your credit score. They often occur without you even knowing about them. For example, whenever you receive a credit card offer in the mail that you have been “preapproved” for, it is very likely that the company did a soft pull on your credit. Employers often perform a soft inquiry on your credit during a background check, as a good credit score may be an indication of a responsible person.

Additionally, personally checking your credit is considered a soft pull, and is a great habit to get into. Not only will monitoring allow you to catch any errors in your report, but knowing your score can also give you an indication of what sort of loan rates you are eligible for. It is easier than ever to see your score online for free on credit education websites such as  Credit.com. It is important to note, however, that the score you see in a soft-pull is not necessarily the same score that a lender will pull, though it will give you a fairly accurate indication of where you stand.

Hard Inquiries or Soft Inquiries 

The credit check that is processed when renting a car, getting internet service or applying for an apartment rental can either hit your credit as a hard or soft inquiry, depending on the credit check service that the institution in question utilizes. In these cases, the only way to really know is to ask the institution what sort of inquiry they use.

What Score Do Lenders Use?

Lenders often use the FICO 08 score, while the score seen in soft inquiries is usually the VantageScore or a FICO score that is not for business purposes. Although lenders have historically favored the FICO score, the VantageScore is becoming more frequently adopted. According to Vantage, seven of the top 10 financial institutions, eight of the top 10 credit card issuers and six of the top 10 auto lenders use VantageScore, although the company did not state the names of these institutions.

The FICO score was developed in the 1970s by Fair Isaac Company, with the intent of helping lenders determine who was most likely to default on a loan. The VantageScore was created in 2006 in conjunction with the three major credit bureaus, in order to create a consistent score between the different bureaus. While the VantageScore previously ranged from 501 to 990, in 2013 it modified the range to match FICO and common expectations, now ranging from 300 to 850.

While both scores serve the same purpose (to help lenders determine the creditworthiness of a potential borrower) there are some significant differences in the scoring models.

VantageScore 4.0 is determined based on 6 different factors: payment history (41%), utilization (20%), credit history/age (20%), new credit (11%), balances (6%), and available credit (2%).

FICO takes into account 5 different factors: payment history (35%), amount of debt (30%), credit history/age (15%), types of credit (10%), and credit inquiries (10%).


Written by Christina Miller
Edited by Carly Simon-Gersuk