What is the difference between a soft credit pull and a hard credit pull?

mother and son viewing tablet

What is a credit pull or credit inquiry?

A credit pull happens when a company checks your credit profile at any of the big three credit bureaus, Equifax, TransUnion and Experian, they get a full view of your credit history and to whom you owe money. That’s right – Your credit profile includes all credit card companies, mortgage companies, auto loan lenders, personal loan lenders, student loan lenders, and really anyone else that you have borrowed money from or has issued you credit. It also details how long you have these accounts, whether the accounts were paid in full and closed, and shows if you missed any payments or went into default. Negative occurances on your credit profile can stick around for up to seven years, so it’s important to not miss payments or default on a loan.

So, what is the real difference between a hard and soft credit pull then.

What is a soft pull or soft inquiry of your credit?

A soft pull on your credit is what happens when you check your own credit, which most people do once a year or so. This soft credit inquiry also happens when you get pre-approved for a loan or when an employer accesses your credit when considering you for a job. These requests to see your credit profile don’t negatively affect your credit score though like a hard inquiry can.

What is a hard pull or hard inquiry of your credit?

A hard pull of your credit happens when a lender actually makes a decision to issue you credit or loan you money. This will happen when you apply for an auto loan, credit card or mortgage. These inquiries can stick around on your credit profile for up to two years and can negatively affect your credit score.

There are instances when it can be smart to have your credit pulled multiple times, like when you are looking for the best mortgage rate from different mortgage lenders. You may have multiple lenders pull your credit, but if they happen within a 45 day window then they only show up as one hard credit inquiry.

It’s an excellent idea to check their credit score at least once a year, and all credit bureaus are required by law to allow all consumers to pull their own credit profile once a year for free to check for fraud and be informed about their personal credit standing. Again, doing a credit pull of your own is only a soft inquiry, so it will not do you any harm. If you are considering borrowing money or applying for credit, you can always ask the institution if the credit inquiry they will be doing is a hard or soft pull, so that you can make your own decision as to whether it’s worth having that potentially show up.

Your credit profile and score can affect the interest rates you are offered for loans or credit cards, and may even play a role in being considered by an employer, so it’s important to stay on top of your credit and be selective of who and when your credit profile is pulled.

To get your free annual credit report – go to www.annualcreditreport.com.