The Difference Between Hard and Soft Credit Inquiries

Image: rawpixel on UnsplashIf you’ve received credit offer after offer in which you’re “pre-approved” for a certain product, you may wonder how the lender made their decision. The insurance/credit card/mortgage company likely made a “soft” credit inquiry into your report without your permission, allowing them a glimpse of your credit.Soft credit inquiryIn addition to those pre-approval offers, a soft inquiry/pull can occur when you check your own report or when, for example, an employer checks it as part of a background check. “Because soft inquiries aren’t linked to a specific application for new credit, they’re only visible on your credit report to you,” writes Experian, one of the three main U.S. credit bureaus. “Potential lenders won’t be able to see them … and soft inquiries are never considered as a factor in credit scoring models.” Meaning they won’t impact your score in any way.That’s different from a hard inquiry.What Is ‘Good’ Debt?Each Monday we’re tackling one of your pressing personal finance questions by asking a handful of…Read more ReadHard credit inquiry“If you apply for credit, such as a mortgage, auto loan or credit card, the lender (with your permission) will check your credit report and credit score from one or more of the major credit bureaus,” writes Experian. This is known as a hard inquiry/pull. Here are some common examples, per Credit Karma:Mortgage applicationsAuto loan applicationsCredit card applicationsStudent loan applicationsPersonal loan applicationsApartment rental applicationsThis can affect your credit score, though one inquiry’s impact will likely be negligible. But if you apply to many of the products listed above in a short amount of time, this will affect your score negatively, but temporarily (it indicates to the credit companies that you’re “having trouble paying bills or are at risk of overspending,” writes Experian).Why Your Credit Score Suddenly Dropped by 200 PointsThere
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