Soft vs. Hard Credit Checks

Lenders and credit card companies may check your credit score in one of two ways: with a hard credit check or a soft credit check.

A hard credit check occurs when a lender pulls your credit report when you apply for financing. This is different from a soft credit check, which is when a lender enquires about your creditworthiness without pulling your full report.

Let’s take a closer look at soft vs. hard credit checks and what they mean for borrowers.

What is a soft credit check?

A soft credit check, also known as a soft credit inquiry or a soft credit pull, typically occurs when a lender or credit card company pulls your credit report on your behalf when pre-approving you for a loan or credit card. They may do this with or without your knowledge.

You can also run a soft credit check to check your own credit score using services like Credit Karma, NerdWallet, or Credit Sesame.

A soft credit check won’t impact your credit score and will only be visible to you. You’ll see soft pulls on your credit report for two years.

What is a hard credit check?

A hard credit check, also called a hard credit inquiry or a hard credit pull, may occur when you formally apply for a loan or line of credit. A lender does a hard pull of your credit to determine whether to approve your financing request.

A hard credit check will appear on your credit report and can negatively impact your credit score in the short term. Hard credit pulls will show up on your credit report for two years and anyone who pulls your credit will be able to see them.

Examples of soft and hard credit checks

To further explain a soft credit check vs. hard credit check, here are some examples of each:

Soft credit inquiries

Soft credit checks are typical with the following:

• Credit card offers
• Pre-approved loan offers
• Insurance quotes
• Background checks
• Employment verification

Hard credit inquiries

Hard credit checks usually happen when you apply for products such as:

• Bank loans
• Credit cards
• Car loans
• Student loans
• Mortgages

What information shows up on soft vs. hard credit checks?

Both types of credit checks display your credit score and personal information, but soft credit checks show a more limited view of your credit report. Pulling your full credit report will detail your:

• Debt, including loans, lines of credit, credit cards, etc.
• Payment history
• Accounts sent to collections (if any)
• Tax liens (if any)

Neither type of credit check will show your bank accounts, utility bill payments, or rent payments because this information isn’t reported to the three major credit bureaus. Being late with payments, however, could potentially impact your credit score if those accounts go to a collection agency.

Do both kinds of credit checks negatively impact credit scores?

No. Soft credit pulls don’t affect your score at all. Hard credit pulls do affect your credit score by causing it to drop for a short time. A single hard credit inquiry could drop your credit score by as many as 10 points, although the average is five points.

But even this isn’t the bad news it might initially seem! As long as you continue to be financially responsible and make all loan or credit account payments on time, your credit score will start to go back up within a few months.

How many hard credit inquiries are too many?

There’s no set number of hard credit inquiries that are considered “too many.” However, if you have a lot of hard inquiries made within a short period of time, this can be a red flag for lenders because they may see you as a lending risk.

But even this isn’t always the case. For example, if you’re car shopping and comparing loan offers from different dealerships, it might be obvious you’re shopping for car financing deals. In this case, the multiple hard pulls might be interpreted as one hard pull and lenders might not be alarmed by the number of hard inquiries on your credit report.

The bottom line: manage your credit inquiries

Since multiple hard credit inquiries can lower your credit score, don’t apply for too many credit cards or loans in a short time frame. If you don’t have the best credit but need to borrow money for unexpected emergencies, a loan from Advance America could be a good financial solution.

From Payday Loans and Installment Loans to Lines of Credit, we offer a variety of financial products to help you cover expenses. We work with borrowers with all types of credit scores, so you can get the money you need quickly, sometimes the same day you apply. Best of all, applying for a loan doesn’t impact your FICO score!

Visit your nearest Advance America store or apply online now!