The Difference Between Hard and Soft Credit Inquiries (And Why They Matter)

Credit inquiries aren't all the same—and that matters to your credit score

A woman holds up a an orange credit card and wonders if she really understands the difference between a hard inquiry and a soft one.

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You probably know that there are different types of credit inquiries.

If not, here’s a quick refresher: A hard credit inquiry is when a lender checks your credit before approving you for a major loan like a mortgage or car loan or a credit card you’ve applied for. A soft inquiry, however, happens when you receive an offer from a lender, like a pre-approved credit card, or when you check your own credit. 

But do you know why hard inquiries happen instead of soft inquiries? What about the differences between the two? How about whether an inquiry is going to be hard or soft before it happens?

Key Differences Between Soft and Hard Inquiries 

Let’s start with soft inquiries.

First and foremost, this type of inquiry does not affect your credit score. This is a good thing, considering soft inquiries are pulled on your credit all the time—when you receive a credit card offer in the mail, when a potential employer performs a background check, or when you check your credit. While soft inquiries do appear on your credit report, only you can see them (with a few exceptions).

Hard inquiries are performed when you apply for a loan, credit card, or mortgage and the lender checks your credit history before granting (or denying) the loan. Hard inquiries stay on your credit report for just over two years, and they do lower your credit score by a few points, though that shouldn’t be a big deal in the long run. However, too many hard inquiries in a short period of time may give lenders the impression that you’re a high-risk customer. 

When Hard Inquiries Happen Instead of Soft Inquiries

So why do hard inquiries occur in lieu of soft inquiries? While soft inquiries can occur without your knowledge, such as those annoying pre-approved credit card offers you receive in the mail, hard inquiries occur when you apply for a loan and the creditor reviews your credit before granting the loan. 

In short, hard inquiries are required when a lender needs to review your credit history before they can determine if you are eligible for a loan. A hard inquiry will likely be required if you apply for a mortgage, a loan, or a credit card

As far as determining whether an inquiry will be hard or soft before it happens, you will likely know when a hard inquiry happens, because you’ll have to give the lender consent. For example, if you’ve ever bought or leased a car, you were asked to sign a credit report authorization form as part of the paperwork. By signing this document, you are giving the dealership’s financing department permission to pull your credit. In other words, you’re giving them the OK to perform a hard credit inquiry. 

What to Do Before an Inquiry 

If you are worried about a potential hard inquiry and the effect it might have on your credit score, you have a few options. First, before you apply for any sort of major loan, like an auto loan, a mortgage, or even student loans, ask the lender whether a hard or soft inquiry will be required in order to secure the funds.

Go Ahead, Rate Shop

While too many hard inquiries can make you look like you are a credit risk, rating agencies understand that several inquiries in a short period could be because you’re “rate shopping.” The agencies will group those inquiries, such as from several mortgage lenders if you’re home loan shopping, into a single hard inquiry on your report. 

Also, be sure to keep your credit inquiries (especially hard inquiries) to a minimum. You don’t want to undercut your credit score by applying for too many credit cards or other loans. (Plus overextending yourself from a credit perspective is also bad financial practice, but that’s another article.) You should also cross-check the hard inquiries you actually initiated with those that appear on your credit report to avoid credit card fraud

The Bottom Line

While both soft and hard credit inquiries are performed to assess the state of your credit, hard inquiries can affect your credit score for a year and stay on your credit report for 24 months. That’s why it’s important to understand the difference between hard and soft credit inquiries, and when each is required.