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What Are Hard and Soft Credit Inquiries? Let Us Explain!


SUMMARY: Are you trying to maximize your credit score for a mortgage, car loan or better credit card?

One of the factors you need to monitor is the credit inquiry, which makes up 10 percent of your credit score. But what are inquiries and how do they work?


What Is a Credit Inquiry?

A credit inquiry occurs when someone reviews your credit report. Another name for an inquiry is a "pull" because that individual is pulling your report.

Credit inquiries can come from the following sources:

  • Loan and credit card applications
  • Employment background checks
  • Apartment background checks
  • Bank account applications
  • Credit card companies pulling your credit report to decide if they want to mail you an offer

What's the Difference Between Hard and Soft Inquiries?

That last bullet point probably has you thinking, "That's not fair." How can someone who's trying to sell you something lower your credit score when you haven't taken any action?

The answer is, they can't. That is where hard and soft inquiries come in.

  • Hard inquiries do affect your credit score. They're generally made when you take an action.
  • Soft inquiries do not affect your credit score. They're generally made without your knowledge.

Examples of Hard Inquiries

These are the common types of hard inquiries.

  • Credit card applications
  • Mortgage applications
  • Personal loan applications
  • Business credit applications backed by your personal credit

Examples of Soft Inquiries

These are the common types of soft inquiries.

  • Credit card offers you get in the mail. Usually, the company makes soft pulls to see who is within its target range before it sends out the flyers.
  • Account reviews. If you have an open credit card or other line of credit, the lender periodically checks your credit to make sure you still meet their lending standards. For example, they want to be warned if you're not paying your other lenders.
  • Checking your own credit. Checking your credit online or getting a free credit score from your credit union is not a credit application, so it doesn't impact your credit score even though you initiated it.
  • Checking for preapprovals. If you're exploring a credit card or lending website and see the words "check for preapproved offers," know that this check is usually a soft pull. Look for language that explicitly states your credit score will not be affected.

Examples of Gray Areas

These are gray areas that are sometimes a hard pull and sometimes a soft pull. How it's coded depends on how the lender makes the inquiry. Double check their policies, and even then, understand that it's probably safer to wait if you're in the middle of applying for a mortgage.

  • Credit limit increases. While this is a credit application, many credit card companies only make a soft inquiry when you request to increase your credit limit on an existing account.
  • Opening a bank account. Some banks and credit unions make hard pulls, some make soft pulls and some don't check your credit report.

Rate Shopping

One final area of note is referred to as rate shopping. When you apply for multiple auto loans or mortgages within a short period of time to find the best interest rate, the credit reporting agencies usually combine the inquiries so they only have the scoring effect of a single inquiry.

To learn more about TDECU's policies on hard vs. soft inquiries, or to discuss our lending criteria for a mortgage, auto loan or credit card, contact us today.

Ready to apply for a loan or credit card? Get started.