What Is a Soft Credit Check vs. a Hard Credit Check?

A credit check, often referred to as a credit inquiry or pull, involves a review of an individual’s borrowing history and financial behavior. It provides lenders and other entities with a snapshot of how a person manages their financial obligations, helping them assess risk and determine the likelihood of repayment before extending credit.

Understanding Soft Credit Checks

A soft credit check occurs when a person or company accesses your credit information. These inquiries are informational and do not signal to other lenders that you are actively seeking new credit.

Soft credit checks happen without your explicit permission for that specific check, though implied consent may be present through broader agreements. For example, checking your own credit score or report through a credit monitoring service results in a soft inquiry. Credit card companies perform soft pulls to determine eligibility for pre-approved offers, which allows them to send targeted marketing.

Common scenarios include background checks for employment purposes, where an employer reviews a limited version of your credit report to assess financial responsibility. Insurance providers may conduct soft inquiries when generating quotes, and some landlords or utility companies use them for preliminary screenings. Existing creditors may also perform soft checks periodically to review your account or offer account adjustments, such as a credit limit increase initiated by the company.

Understanding Hard Credit Checks

A hard credit check occurs when a lender or financial institution accesses your full credit report as part of a formal application for new credit. This type of inquiry requires your explicit permission before it can be performed.

The impact on a credit score from a single hard inquiry is minimal, often a drop of five to ten points. Multiple hard inquiries within a short timeframe can lead to a greater score impact, signaling increased risk to lenders.

Hard credit checks are common when applying for significant financial products. This includes applying for new credit cards, personal loans, auto loans, or mortgages. A hard inquiry may also occur if you request a credit limit increase on an existing credit card account. Utility or mobile phone providers may perform a hard check if a deposit is required for service. Landlords may also conduct hard inquiries as part of a rental application process.

Key Differences and Impacts

The primary distinction between soft and hard credit checks lies in their impact on your credit score and the circumstances under which they occur. Soft inquiries allow individuals to review their credit or receive pre-approved offers without affecting their score or concern for negative repercussions. Hard inquiries, conversely, can cause a small, temporary decrease in your score, reflecting a new credit application.

Another difference is the requirement for permission. Hard credit checks necessitate your explicit consent, usually obtained through a signed application. Soft inquiries, however, do not require such direct authorization, especially for pre-screening purposes or when you check your own report. This distinction highlights their different purposes: soft checks are informational or for preliminary assessments, while hard checks are integral to a lender’s decision-making process for extending credit.

Both types of inquiries remain on your credit report for up to two years. Soft inquiries are only visible to you, the consumer, when you access your own report. Hard inquiries, in contrast, are visible to other lenders, signaling your recent applications for new credit. While a hard inquiry remains for two years, its influence on your credit score lessens after about 12 months. FICO scoring models often group multiple hard inquiries for specific loans, like mortgages or auto loans, within a 14-to-45-day period, treating them as a single inquiry to mitigate score impact during rate shopping.