Skip Navigation
After navigation

Could student loan refinancing save you money?

Soft Credit vs. Hard Credit: The Real Difference

Photo of Mollie Allen
Whether you’re trying to get a loan, a credit card, or a cell phone, your credit profile is at the center of attention. It’s even common for a potential employer to review your credit. There are two types of credit inquiries that may be done: a hard credit inquiry or a soft credit inquiry. It’s important to understand the difference and how each may impact your FICO® score (the most common credit score used). 

What Is a Soft Credit Check?

A soft credit check, sometimes called a soft credit inquiry or “soft pull,” is a review of your credit. This type of credit check is commonly performed by a potential employer, or by a credit card company before they send you an offer (such as the offers you receive in the mail).

It also includes credit reviews you have initiated, such as requesting your free annual credit report or determining the interest rate you may qualify for on a loan (i.e. pre-approval). Essentially, a soft credit check is when your credit history is being reviewed, but you haven’t requested a credit line or loan.

Do Soft Credit Checks Affect Credit?

A soft credit check will not impact your credit score. It’s common for credit card companies to purchase your data from the credit reporting companies to determine if you qualify for their offers. And because a soft credit inquiry also includes any time you request your credit report for your own review, think of how unfair it would be if you were “dinged” every time you wanted to view your own credit report.

What Is a Hard Credit Inquiry?

A hard credit inquiry, sometimes called a hard credit check, or “hard pull,” is typically conducted in response to situations such as applying for an auto loan, personal loan, credit card, mortgage, housing rental, and certain student loans (such as Direct PLUS Loans, and private student loans). This happens when you have requested that a creditor or lender loan you money or accept your promise to pay, like when you promise to pay rent.

Hard credit pulls cannot be done legally without your authorization. If you are applying for a loan or line of credit, or if you are attempting to secure housing (including an apartment or house rental), you must give permission for your credit to be pulled.

How Many Points Does a Hard Inquiry Affect Your Credit Score?

A hard credit check may impact your credit score, especially if you’re still working on establishing your credit history.

For many people, there is not likely to be an impact to their overall score. For some, the hit could be around 5 points off their FICO® score; which could make a dent if your credit score is lower to begin with.

This seems to plague college students and recent graduates because of the limited number of accounts and brief credit history in their profile. It’s best to exercise caution when applying for credit and try not to exceed six inquiries in a twelve month period. Why six? This number sends a signal that you may be a high risk to creditors since individuals who exceed six inquiries are 8 times more prone to file for bankruptcy than people who have no inquiries.

How Long Do Hard Inquiries Stay On Your Credit Report?

Credit inquiries may stay on your credit report for up to 24 months, but will only impact your credit score for the first 12 months.

Interest Rate Shopping

It is important to know how ‘rate shopping’ works. FICO® considers all similar inquiries made within a 14-45-day window as a single inquiry. This window is dependent upon the version of the FICO scoring formula used to calculate your FICO score. This applies to mortgages, applying for housing such as an apartment or home rental as well as auto loans and even student loans. Outside of this ‘rate shopping’ exception, each time a hard credit inquiry occurs, it could cost you a few points on your score.

How to Remove Hard Inquiries From Your Credit Report

If you are reviewing a copy of your credit report and find unauthorized inquiries, you should contact the credit reporting companies and file a dispute. This could indicate fraudulent activity so make sure you are vigilant. Follow up! You may need to contact the creditor listed on your report and ask them why the inquiry was made if it is not familiar to you. Look into adding a security freeze on your credit report. A security freeze puts a stop on any new credit in your name, and prevents an identity thief from foul play with your credentials. It also means a legitimate creditor that you are trying to get a loan or credit card with will not be able to review your file and approve you until you lift the freeze. But you can do so temporarily and then put the freeze back on your account if necessary.

What to do next?

Understanding credit scores and good credit

Commonly needed contacts for borrowers