What’s the Difference Between Hard and Soft Credit Checks?

When it comes to personal finance and credit, there’s a lot to think about. One of those things is a credit check, and how it works. You’ve probably heard the term "hard pull" on your credit, as opposed to a "soft pull." But what’s the difference, and why does it matter? If you’re trying to get a loan or a credit card, or you just want to keep an eye on your financial health, it’s a good idea to understand these two different kinds of credit checks and how they affect your financial options.

What Are Hard Credit Checks?

Hard credit checks, also known as hard pulls or hard inquiries, happen when a financial institution takes a careful look at your credit report with your authorization. That’s typically done in response to a credit application, like applying for a credit card or a car loan. These checks can lower your credit score temporarily, and other lenders can see them, as well.

Because they show that you’re looking to take on more debt, each hard inquiry can potentially lower your score by a few points. How much impact a hard credit check will have on your specific score varies depending on your overall credit history. Multiple hard inquiries within a short period can signal to lenders that you’re actively looking for credit, which could raise concerns about your financial stability.

If you’re actively looking for a loan through a company like Symple Lending, for example, the number of hard credit checks on your report could be a factor in whether you’re approved. Hard inquiries will show up on your credit report for up to two years but they usually only affect your credit score for the first year. Eventually, they’ll disappear from your credit report altogether.

What About Soft Credit Checks?

Soft credit inquiries, often referred to as soft pulls, happen when your credit is checked for informational purposes, rather than in response to a credit application. These inquiries can come from checking your own credit, along with potential employers, landlords, or lenders conducting pre-approval checks. Unlike hard inquiries, soft inquiries don’t impact your credit score.

An experienced debt consolidation agent can talk with you about any hard inquiries on your report, but they won’t even see soft inquires. They may also make one of their own, to see if they can give you a tentative pre-approval for the credit you’re looking for.

Should You Worry About Credit Checks?

Understanding when hard and soft credit checks occur is important for managing your credit. Soft inquiries are harmless, but hard inquiries should be avoided as much as possible. That’s especially true if you’re planning significant financial moves, like applying for a mortgage or car loan. By understanding the differences, you can be more mindful of how your credit is shaping up and any effects inquiries might have on what you want to do in the future.