Hard vs. Soft Credit Inquiries

Before we define hard and soft inquiries, we first need to define what credit inquiries actually are. Credit inquiries are records that are created when someone looks at your credit information, even if that someone is you. Credit inquiries are designed to log and maintain records of how many people are looking at your credit information and why they are doing it too. Credit inquiries come in 2 forms – hard inquiries and soft inquiries.

Hard inquiries occur when a business views your credit report in connection with an application for credit, such as a credit card, loan, or mortgage.

Soft inquiries occur when your credit is checked for more casual reasons, such as background checks on new employees in a company.

Hard inquiries show up on your credit report, and can negatively affect your credit score if you have too many of them. This is because a credit report with a high number of hard inquiries can suggest that a borrower is applying (or trying to apply) for more loans than they can pay back, which calls their financial skills into question. This can be potentially damaging to people who are shopping around for mortgage rates and having their credit checked by lenders frequently within a short period, so keep that in mind. Most hard inquiries stay on your credit report for 1 year, with some staying on there for up to 2 years.

Soft inquiries occur when you check your own credit report, when a new employer performs a background check on you, when a routine check is performed on you, or when you are checked in connection to a pre-approved credit offer. A soft inquiry is not seen by others, and will not show up on your credit report. Checking your own credit report (even frequently) will not negatively impact your credit score, and neither will participating in credit monitoring programs that check your credit on a regular basis.

Hard and soft inquiries are used for a plethora of reasons, but one of the most common reasons is fraud detection. A hard inquiry may appear due to a credit card or loan application, for example, and could alert you to your identity being stolen. If you see a hard inquiry on your credit report that should not be there, be sure to call the appropriate agency as soon as possible and alert them that you may be a victim of fraud.

Try to avoid hard inquiries as much as you can, and try to only cause them when it is necessary. A high amount of hard inquiries is likely to drag your credit score down, even if you don’t take any of the offers for credit that you are given. Always try to keep your credit score as high as possible!