Inquiries can appear on your credit report and even bring down your credit score, depending on the type of pull that occurred. So what is the difference between a soft pull and a hard pull?
If you decide to apply for a bunch of credit cards, you’ll quickly find out that your score can be affected negatively by these queries. This is due to the type of pull that was done — a hard pull, also known as a “Hard credit inquiry”.
However, what about when you go to the bank to open a new account, or when you get those “pre-approved” credit card notices that you receive in the mail? Most of these, the one’s that you did not apply for credit with, are simply soft pulls, which means they do not affect your score. Let’s take a better look at the 2 types of credit pulls that exist.
What is a Soft Pull?
Soft pulls are done by companies that simply need to take a quick look at your credit report. This can be your landlord/apartment complex, loan officers who need to see if you pre-qualify for their services, banks, insurance companies, companies you are seeking employment from, etc. There are a lot of people who may do soft pulls on your credit, even without your knowledge or permission!
Note: these are sometimes referred to as soft credit inquiries.
In fact, even using AnnualCreditReport.com to check your credit report annually is considered a soft pull and has no negative affect on your credit score.
Again, soft pulls have no negative affect on your credit score, so don’t fret over these types of credit report pulls.
What is a Hard Pull?
A Hard Pull is quite different. These occur when you apply for credit, such as credit cards, new car loans or even a mortgage (after you’ve been pre-qualified from a soft pull).
Hard Pulls will negatively affect your credit score. If you apply for many different credit accounts in a small time frame — you will notice your credit score go down quite a bit, quickly.
Note: these are sometimes referred to as hard credit inquiries.
Just because a company offers you special deals for applying and getting approved for their credit card doesn’t make them worth the effort, especially considering the fact that they can cause your score to drop and affect your chances of being approved for something bigger, such as a car or home.
Summary
Be careful of applying for too many accounts in a short period of time. Hard pulls will cause your credit to drop and cause other companies to question why you applied for that credit.
Soft pulls can be done with or without your knowledge. They do not cause your credit score to drop. These types of pulls are done by companies who want to ‘pre-qualify’ you for their credit (ie, credit cards, mortgages, etc.). Don’t worry about soft pulls.
