Hard Credit Check vs Soft Credit Check

As consumers, we often hear about the importance of maintaining a good credit score. A good credit score can make it easier to get approved for loans, credit cards, and even apartments or jobs. But did you know that the type of credit check that is performed can have an impact on your credit score?

In this article, we’ll explore the difference between hard credit inquiries and soft credit inquiries. We’ll discuss how hard inquiries can affect your credit score and provide some strategies for minimizing their impact.

What’s a hard credit check?

A hard credit check, also known as a hard inquiry, occurs when a lender or creditor reviews your credit report as a part of a credit application. This can happen when you apply for a loan, credit card, or mortgage, for example.

When a hard inquiry is made, it is recorded on your credit report and can potentially impact your credit score. Hard inquiries can remain on your credit report for up to two years, although their impact on your credit score typically decreases over time.

What’s a soft credit check?

A soft credit check, also known as a soft inquiry, occurs when an individual or company checks your credit report for non-lending purposes. This can happen when you check your own credit report, or when a potential employer or landlord performs a background check.

Soft inquiries do not impact your credit score and are not visible to lenders or creditors who review your credit report. Soft inquiries also do not stay on your credit report.

What’s the difference between hard and soft credit checks?

The main difference between hard and soft credit checks is the impact they have on your credit score. Hard inquiries can potentially lower your credit score, while soft inquiries do not.

Hard inquiries are typically made when you apply for new credit, such as a credit card or loan. When you apply for multiple credit cards or loans within a short period of time, it can result in multiple hard inquiries on your credit report. This can be seen as a red flag to lenders, who may view you as a high-risk borrower.

Soft inquiries, on the other hand, are typically made for non-lending purposes, such as background checks or pre-approvals. Soft inquiries do not impact your credit score and are not visible to lenders or creditors who review your credit report.

How do I know what type of credit check will be done?

When you apply for credit, the lender or creditor will typically let you know if a hard or soft credit check will be performed. If you’re unsure, it’s always a good idea to ask before submitting your application.

Keep in mind that some applications may result in a hard inquiry, even if you didn’t intend for it to happen. For example, if you apply for a credit card and are not approved, the issuer may still perform a hard inquiry on your credit report.

How long does it take for my score to improve after a hard credit check?

If a hard inquiry does impact your credit score, the impact is usually temporary. The exact amount of time it takes for your credit score to recover depends on a variety of factors, including the number of hard inquiries on your credit report and your overall credit history.

In general, the impact of a hard inquiry on your credit score will start to decrease after 6 months, and will typically be completely gone after 2 years.

How can I improve my credit score?

If you’re concerned about the impact of hard inquiries on your credit score, there are a few strategies you can use to minimize their impact:

1. Space out your credit applications. Applying for credit cards or loans all at once can result in multiple hard inquiries on your credit report, which can lower your credit score. Instead, try to space out your credit applications over time.

2. Be cautious about applying for multiple credit cards. Having multiple credit cards can be beneficial for your credit score, but applying for too many at once can result in multiple hard inquiries on your credit report.

3. Check your credit report regularly. By checking your credit report regularly, you can ensure that all of the information is accurate and up-to-date. You can also monitor for any unauthorized hard inquiries on your credit report.

To sum it up, understanding the difference between hard and soft credit inquiries is an important part of maintaining a good credit score. By being aware of when a hard inquiry may be made and taking steps to minimize their impact, you can help ensure that your credit score remains strong.