A lot of people don’t know that there are two types of credit inquiries, hard and soft. A hard inquiry is also known as a hard pull or a hard check on your credit report. A soft inquiry is also known as a soft pull or soft check on your credit report.
It is important to understand the difference between hard credit inquiry vs. soft credit inquiry because it will impact your FICO score and how you manage your finances.
In this article, we will explain in detail what each type of inquiry means for you so that you can better understand how they affect your financial standing and make smart decisions about which creditors to do business with in the future!
What are Credit Inquiries?
When you apply for a loan, credit card, or mortgage, the lender requests your credit report to determine whether you qualify for their products. This is known as an inquiry, and it will appear on your credit report as a hard check (hard pull) or a soft check (soft pull).
When you apply for credit, the creditor gets your information. This confirms that you have a credit history and an active credit file.
The creditor then evaluates your creditworthiness based on the information in your report. This evaluation can result in an approvable credit decision, a decline, or no-decision. If approved for the product, you can then complete your application and sign any legal documents.
What is a Hard Credit Inquiry?
A hard credit inquiry is conducted when a creditor checks your credit report to make an eligibility decision; this may include, but is not necessarily limited to, the following:
- In case you apply for utility services, such as electricity, gas or water.
- When you apply to rent an apartment.
- If you fill out an application at a local store.
- When you buy insurance policies, including auto and/or home insurances.
- In case your employer runs a credit check on you. In order to get the job!
Moreover, hard inquiry on credit include:
- Credit loan Application
- Mortgage loan Application
- Secured credit card application
- Bankruptcy filing
- Foreclosure procedures can also include a hard inquiry and result in.
What Is Soft Credit Check?
A soft credit inquiry occurs when information in your credit report is requested but not used to make an eligibility decision. The following are examples of a soft pull on your credit report:
- If you open a new account, such as store card and/or utilities (except electricity), phone, etc.
- When you apply for pre-approved offers of credit, such as store cards and/or utilities (except electricity), phone, etc.
- When you shop for car insurance based on your current policy.
- Credit card Applications (including those with secured credit)
- Mortgage loan preapproval (no home loan)
Other common differences between hard credit inquiry vs. soft credit inquiry?
Differences between hard pull on credit and soft pull on credit include:
In Hard Pull – Lenders are able to view your account information; this includes financial history, balances, payment history, and other personal information that may affect your chances of getting a loan.
In Soft Pull – Creditors only see your credit report and score; they do not see other information about your finances.
In Hard Credit Check – Lenders may rely on the information revealed during a Hard inquiry credit report to make loan approval decisions.
In Soft Credit Check – Credit card and insurance companies are authorized by federal law to conduct soft inquiries without affecting your FICO score or impacting your ability to get loans in the future.
Hard Credit Inquiry – A hard pull is more likely to produce a credit score drop than a soft pull.
Soft Credit Inquiry – Soft pulls do not affect the FICO score and are unlikely to affect your score over time.
Consequences Of Having Too Many Hard Credit Inquiries on Your Report?
A hard pull on your credit report can have a negative impact because it is considered by the FICO score. The more hard pulls you have, the more likely it is that your score will go down. If you already have a lot of negative items in your credit report, there is an option to seek help at one of the credit repair companies. Pay attention that some items on your credit report can not be removed even with credit repair services. However, you can schedule a free online consultation with Credit Saint credit repair company to know the details.
Final Thoughts!
It is important to know what a hard credit inquiry and soft credit inquiry are, the difference between them, and how they can affect your report. You should also be aware of the consequences that come with too many hard inquiries on your account. We hope now you get an idea about all these things and have learned something new!
