Soft and Hard Inquiries: What’s the Difference?

Soft and Hard Inquiries: What’s the Difference?

Credit inquiries come in two flavors: soft and hard.  Both inquiries are authorized requests to see your credit report. But the similarities end there.

Soft Inquiries. A soft credit inquiry is sort of a more routine credit check that can be done without your permission. Examples include when a lender you currently do business with requests your report to make sure you’re still creditworthy and when you check your own credit report. The key takeaway for this is that they won’t affect your credit score because they’re not applications for credit.

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Hard Inquiries. A hard inquiry happens when a potential lender requests your credit report to help evaluate whether to offer you credit. Examples include applying for a mortgage, car loan, and credit card.

Why Do They Matter

Though soft inquiries will show up on your credit report, they will have no effect on your perceived creditworthiness. Hard inquiries, on the other hand may be factored into credit scoring models. Though they are generally seen to have a negative effect on credit scores, the impact of each inquiry isn’t usually too big. However, too many of them on your credit report may drag your credit score down, especially over the shorter run.

Here’s the good news however on hard inquiries: they’ll fall off of your credit report after two years. Also, if you make a certain amount of them within a short period of time when you’re loan shopping for a single purchase (like a mortgage), credit scoring models will generally consider all those to be one inquiry – they don’t want to penalize you for shopping around for the best deal.

Bottom line, don’t worry about soft inquiries, but keep an eye on your hard ones.

This article was originally published on TrueCredit.comIt was sent for republication by Carrie Palmer, a content strategist for the company.