The Difference Between Hard and Soft Credit Inquiries

When we talk about credit scores, inquiries almost feel like an afterthought. Inquiries, or new credit, only contribute about 10 percent to your FICO score, so it’s easy to assume they aren’t a big deal.

But you know what? Sometimes it’s the little things that ding your score just enough to knock you out of the excellent credit score range down into the good credit score range. This means a higher annual percentage rate or interest rate, so this costs you real dollars.

All inquiries are not created equal, though. Let’s look at both hard and soft inquiries and you’ll learn how each type affects your credit score.

What Is a Hard Inquiry?

When you apply for a credit card, the credit card issuer “pulls” your credit report from one of the three major credit bureaus. This is a hard inquiry.

[Read: The Best Rewards Credit Cards of 2018.]

A hard inquiry might lower your score from zero to five points, depending on your credit profile. For example, the score considers how long it’s been since your last inquiry. I really can’t stress enough that the number of points lost, if any, varies based on an individual’s credit history.

Another example of a hard inquiry is when you apply for a mortgage. Fortunately, the FICO score recognizes when you’re rate shopping. For instance, if you apply for mortgages with four different lenders within 45 days, the FICO score counts this as only one hard inquiry.

Hard inquiries stay on your credit report for about two years, but the FICO score ignores these after 12 months. But aside from your score, if you have many inquiries over a short period, you’ll start to look risky to a potential lender. This is especially a problem for those who have a short credit history.

What Is a Soft Inquiry?

There are a variety of activities that result in a soft inquiry. When you check your own credit report, for example, it’s considered a soft inquiry.

It’s a misconception that checking your report lowers your credit score. You can check your free annual credit reports from the three major bureaus without any credit score worries.

[Read: The Best Cash Back Credit Cards of 2018.]

The companies you already have accounts with might also check your credit report to determine if you are still creditworthy. For example, your credit card company likely looks at your report and your credit score monthly.

And you know all those “preapproved” offers for credit cards you’ve received in the mail over the years? Credit-related companies do a soft inquiry on your credit report. If you appear to be within their target demographic, you’ll get an offer letter.

Another example is when a potential employer views your credit report for a background check. The employer needs your permission to do this, but it’s a soft inquiry, so it doesn’t reduce your credit score.

Can You Avoid a Hard Inquiry?

Well, yes and no. First, you can avoid it by being strategic with your money management.

Don’t apply for credit cards that you know you won’t qualify for. That’s a hard inquiry plus a rejection. Know where you stand on the credit score range. There are a multitude of free ways to find out if you have excellent or just fair credit. Your current credit card issuer might offer a free score.

There are also many credit score apps and free educational scores from websites. Educate yourself so you’ll make better credit decisions and avoid an unnecessary hard inquiry.

And do remember to conduct your rate shopping for things like an auto loan or mortgage within a short amount of time. You can’t avoid one hard inquiry during this process, but you can minimize the negative impact on your score by taking a smart approach.

[Read: The Best Secured Credit Cards of 2018.]

Now, there are a few credit card issuers that don’t do a hard inquiry on specific credit cards. These credit cards generally target those with bad credit. There are a few good options in this category, but you need to do your research and read the fine print carefully before getting a credit card that seems to guarantee approval regardless of your credit history.

Do keep in mind that these issuers do soft inquiries to confirm your identity. I’ve heard from consumers who ended up with hard inquiries because the issuer had to do a deeper dive into the credit report to feel comfortable with the person’s identity. So keep in mind that a hard inquiry is still a possibility.

Now, if you are applying for a credit card or a loan from a major bank, then it will result in a hard inquiry. But you’ll get a credit card or a loan that you want, and if your score is high enough, it will have little impact (if any) on your creditworthiness.

What If You See Inquiries That Shouldn’t Be There?

Errors do happen, so if there’s a wayward inquiry on your report, take action as soon as you can. Get your free annual credit reports from the three major bureaus, and see which reports contain the inquiry that you don’t recognize.

You can dispute the error with the bureau (or bureaus) involved. Write a letter explaining the error and include a copy of your report with the error highlighted or circled. The bureau will investigate and respond within 30 days.

More from U.S. News

How Often Does My Credit Report Update?

How to Apply for a Credit Card the Right Way

How to Get Your Free Annual Credit Reports

The Difference Between Hard and Soft Credit Inquiries originally appeared on

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