A soft inquiry does not affect your credit score, so no points will be lost. However, soft credit checks may still appear on your credit profile. On the other hand, hard credit inquiries will generally lower your score by 5 points or less.1
Learn what happens to your credit score and financial report when you submit a loan application below.
Soft vs. Hard Credit Check: What’s the Difference?
It’s essential for consumers to know the difference between soft and hard credit inquiries. Understanding how credit inquiries affect your credit score can help you make fully informed financial decisions.
- Soft Credit Check — A soft credit check occurs when you or an authorized party checks your credit profile as part of a background check, such as when you inquire about quick cash loans to see if you qualify for pre-approval. Soft inquiries do not affect your credit score and do not typically appear on your credit profile.
- Hard Credit Check — A hard credit pull is done when you submit an application for a new credit card, loan, or mortgage. A hard inquiry allows the financial institution to view your credit reports and make an approval decision. Unlike soft credit inquiries, hard credit inquiries do lower your credit score.
How Long Does a Credit Check Stay on a Credit Report?
Hard inquiries do affect credit scores and appear on credit reports. And while soft inquiries don’t affect credit, they may appear on your credit reports. So how long are hard and soft credit inquiries visible to lenders?
Hard credit inquiries will remain on your credit report for up to two years. The credit bureau will remove the hard credit check from your report after those two years. However, hard inquiries will only affect your FICO score for a few months afterward—up to one year. If you undergo multiple inquiries within a short period, the damage to your credit will be more significant.
A soft inquiry does not usually appear on a credit report. If you notice a soft inquiry on your credit report, rest easy knowing that your credit score will not change as a result. You can expect soft inquiries to disappear from a credit profile within two years.
What if There Is an Inaccurate Inquiry on My Credit Report?
The three major credit bureaus provide consumers with one free financial report annually. Visit the Annual Credit Report website or call (877) 322-8228 to get your free credit report from each credit bureau every twelve months.
If you notice an unusual inquiry you did not authorize, know that you can correct errors on your credit report. To file a dispute with one of the three credit bureaus, you can do one of the following:
- Call Equifax (800-864-2978), Experian (888-397-3742), or TransUnion (800-916-8800).
- Mail a detailed letter or dispute form to the credit reporting agency.
- Submit a dispute form online through the credit bureaus’ website.
The credit bureau with the error will conduct an investigation, and you can typically expect a response within 30 days. If the credit inquiry is an error, the credit bureau will promptly remove the inaccurate information.
Is It Bad To Check My Credit Score or Credit Reports?
Reviewing your own credit profile and score does not affect your credit because that is a soft inquiry. You can continuously check your financial information without negatively affecting your financial history!
Financial experts advise consumers to check their own credit scores and reports at least once a year. Checking your credit reports often ensures that your information is accurate and that there are no fraudulent accounts in your name. You may be a victim of identity theft if you notice unusual or suspicious information on one of your credit reports. In that case, it’s a good idea to freeze credit reports for all three bureaus and make a report.
What Information Do Lenders See on My Credit Reports?
When you authorize credit checks, you allow visibility of your credit reports. Credit reports are detailed summaries of your financial activities.
There are three major credit bureaus: Equifax, Experian, and TransUnion. Each credit bureau keeps a record of your financial information and provides it to lenders, employers, insurance providers, landlords, etc. However, the Fair Credit Reporting Act (FCRA) requires businesses to have a “permissible purpose” to view a consumer’s credit report. But what personal information can you see on a credit report?
- Personal Information — Your credit reports will all have basic personal information about you, such as your name, birth date, current, and past residential addresses, phone numbers, and SSN.
- Financial Accounts — Your current and past financial accounts can be seen on your credit report. If you have closed loan or credit card accounts from the past ten years, they may still appear on your report. Each account will have a corresponding date and status, such as open, closed, or past due.
- Payment History — When a lender checks your report, they can also view your payment history for each account. Your payment history is crucial, as it directly affects your credit score and eligibility for funding. You can improve your payment history on your credit report by setting up automatic payments or bill reminders.
- Credit Inquiries — Hard and soft inquiries will appear and remain on your report for up to two years. Lenders and credit card issuers can view the company that pulled your information and the date of the inquiry.
- Public Records — Your public records can also be visible on your credit reports. Public records include bankruptcies, liens, and foreclosures. Most negative financial information will remain on your credit reports for up to seven years.
What Other Financial Activities Affect Credit Scores?
Hard inquiries affect your credit by a few points, but what other financial activities cause your credit to dip? Credit scores depend on credit scoring models, such as VantageScore and FICO. A credit scoring model is an algorithm that calculates your level of financial risk based on various factors. For example, FICO uses five factors to make up your credit score.
|Factor||Description||Percentage Impact on Credit Score|
|Payment History||Reflects how consistently you pay your bills on time.||35%|
|Total Debt||The amount of debt you have in relation to your credit limits (credit utilization).||30%|
|Length of Credit History||The duration of your credit accounts, with longer histories generally being more favorable.||15%|
|New Credit Inquiries||The number of recent hard inquiries or credit checks, like when applying for a loan or credit card.||10%|
|Credit Mix||The variety of credit accounts you have, such as credit cards, mortgages, and installment loans.||10%|
Factor 1: Your Payment History
Payment history counts for 35% of your total FICO score. If you continuously pay your bills on time, you can expect to have a good credit rating or higher. Late payments can decrease your score and appear on your credit reports, so ensure you avoid missed due dates.
Factor 2: Your Total Debt
Almost every consumer has outstanding credit card debt, so having debt is not abnormal. However, debt becomes an issue when you use more than 30% of your available credit. If you aim to build good credit, it’s crucial to lower the amount of debt you carry.
Factor 3: Length of Your Credit History
The length of a consumer’s credit history counts for 15% of a credit score. Your credit history is the only factor you cannot actively fix. Keeping accounts open can help you get a longer average credit history.
Factor 4: New Credit Inquiries
The number of hard inquiries you make within one year affects your credit by 10%. Every hard credit inquiry you make lowers your credit score. However, most credit scoring models only count one inquiry if you apply for one type of loan with multiple lenders. For example, suppose you want an auto loan and apply with multiple lenders. In that case, you will only see one hard inquiry on your credit report!
Factor 5: Credit Mix
The type of financial accounts you have counts for 10% of your credit score. Responsibly managing a mix of revolving and installment credit can improve your credit rating. However, a credit mix is unnecessary for building a good credit score.
FAQs About Credit Inquiries
A soft credit inquiry is a check on your credit profile that doesn’t affect your credit score, often used for background checks or pre-approvals. A hard credit inquiry, on the other hand, is a deeper look into your credit by lenders when you apply for credit, and it can affect your credit score.
If you apply for multiple auto loans within a short period (typically 14 to 45 days), credit scoring models treat them as a single hard inquiry. This is to encourage rate shopping without heavily penalizing your score.
A hard inquiry remains on your credit profile for up to two years. However, its impact on your credit score diminishes over time, usually within a few months to a year.
Yes, if you notice a hard inquiry on your report that you didn’t authorize, you can file a dispute with the respective credit bureau to have it reviewed and potentially removed.
While there’s no set number, financial experts often advise against having more than six hard inquiries within a year. Multiple hard inquiries in a short span can significantly affect your credit score.
Yes, if you’re denied credit due to information on your financial report, the lender is required to provide you with an “adverse action notice” detailing the reasons for denial. This can give you insights into what areas of your credit profile to improve.
CreditNinja: A Summary of Soft Credit Checks
If you are interested in applying for a new loan or credit card, search for lenders that provide a pre-approval estimate. A pre-qualifying decision is made using a soft credit check, which does not alter your credit score. Soft credit inquiries allow consumers to compare multiple loan offers without affecting credit scores.