The difference between hard and soft credit inquiries, and why it matters

If you’ve applied for a mortgage, loan or credit card recently, you may have been told you’d receive a “hard inquiry” (or “hard pull”) on your credit.

On the other hand, when you check your own credit report or authorize a person or company to perform a background check, or if a credit card issuer preapproves you for an offer, these are all considered “soft inquiries” (or “soft pulls”). These do not affect your credit score.

So why do hard pulls matter?

Put simply, a hard inquiry occurs when a financial institution checks your credit when making a lending decision. This could lower your credit score by a few points, which is why financial experts suggest not taking out multiple loans, credit cards or mortgages at once. This could suggest you’re short on cash, making you more of a high-risk customer to lenders and credit card issuers.

However, one hard inquiry won’t significantly impact your credit, and the impact will lessen over time.

You can shop around for the best deal, though, without dinging your score. FICO® and VantageScore®, agencies that calculate your credit score, usually combine multiple inquiries for the same type loan — a car loan, for example — into one as long as they all occur within a short period of time. Work quickly and complete your comparisons in 15-30 days.