Hard Credit Inquiry vs. Soft Credit Inquiry: A Detailed Guide

When you apply for a loan or credit card, the lender will most likely pull your credit report. This is known as a hard credit inquiry, and it can have a negative impact on your credit score. On the other hand, some companies may simply check your credit report for informational purposes. This is called a soft credit inquiry, and it won’t affect your credit score.

Hard Credit Inquiry

A hard credit inquiry occurs when a lender pulls your credit report in order to make a lending decision. For example, if you apply for a mortgage, the lender will most likely do a hard credit inquiry. Hard inquiries can stay on your credit report for up to two years and can slightly lower your credit score.

If you’re shopping around for a loan or credit card, it’s important to keep in mind that multiple hard inquiries within a short period of time can have a bigger impact on your credit score. This is because it looks like you’re desperately trying to borrow money. As a result, it’s best to shop around for loans within a 14-day period so that all of the inquiries will be treated as one.

Soft Credit Inquiry

A soft credit inquiry occurs when a company checks your credit report for informational purposes. For example, if you’re applying for a job, the employer may do a soft credit check. Soft inquiries can stay on your credit report for up to 12 months, but they won’t have any impact on your credit score.

In some cases, you may see a soft inquiry on your credit report even if you didn’t give the company permission to do a credit check. This is known as an unauthorized soft inquiry, and it can be removed from your report by filing a dispute with the credit bureau.

What’s the Difference?

The main difference between a hard credit inquiry and a soft credit inquiry is that hard inquiries can have a negative impact on your credit score while soft inquiries will not. Hard inquiries are typically done by lenders when you’re applying for a loan or credit card, while soft inquiries are typically done by employers or landlords.

If you’re shopping around for a loan, it’s important to keep in mind that multiple hard inquiries within a short period of time can have a bigger impact on your credit score. As a result, it’s best to shop around for loans within a 14-day period so that all of the inquiries will be treated as one.

Unauthorized soft inquiries can be removed from your credit report by filing a dispute with the credit bureau.

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