Hard vs. soft credit check — what’s the difference?
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Updated 11:01 a.m. UTC Nov. 14, 2023
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When you or someone else accesses your credit information, the credit bureau that granted the access places a record of the credit check on your credit report. Some credit checks (aka credit inquiries) are hard while others are soft.
Hard credit checks have the potential to damage your credit score. Soft credit checks, by comparison, do not impact your credit score in any way.
Here’s what you need to know about these two types of credit checks. Understanding the difference between hard and soft credit inquiries can help you protect your credit score from unnecessary damage while still allowing you to use your credit for your benefit without fear.
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What is a credit check?
A credit check, also called a credit inquiry, is a term that describes someone accessing your credit report from one of the consumer credit reporting agencies. A credit reporting agency (like Equifax, TransUnion, or Experian) must add a record to your credit report when it shares details from your credit file with others. This record lets you know that someone has reviewed your credit information.
When is a credit check used?
Credit checks occur under two common sets of circumstances. First, a credit check may happen when you want to review your own credit information. The other category of credit check that may occur takes place when a third party wants to review information about you. For example, if you apply for a credit card, the lender will likely review your credit report as part of the application process to determine whether to approve you for a new account.
Before someone else can check your credit, they must have what’s known as “permissible purpose” to do so. The Fair Credit Reporting Act (FCRA) outlines who can access your credit report and when. Some examples of permissible purpose under the FCRA include applications for credit or insurance, employment credit checks (with your written permission) and child support-related credit checks.
Hard credit check
A hard credit check, or hard inquiry, typically happens when you seek new credit. Here are some examples of hard inquiries that might appear on your credit report.
- Loan applications.
- Applications for credit limit increases from existing credit card issuers.
- Applications for new utility services.
Hard inquiries can remain on your credit report for up to two years. However, FICO® Scores only consider them for 12 months.
Soft credit check
A soft credit check, or soft inquiry, will not damage your credit score. In fact, if a lender or employer reviews your credit report, soft inquiries will not appear on them. Soft inquiries are only visible on credit reports you (the consumer) check yourself.
Examples of soft credit inquiries include:
- Reviewing your own credit report.
- Account management reviews by current creditors.
- Employment-related credit checks.
Soft inquiries may remain on your credit report for 12 to 24 months. But, again, this type of credit inquiry will have zero impact on your credit score while it is on your credit report.
How to prepare for an inquiry
If you plan to apply for something (e.g., a personal loan, credit card, new job, utility services, etc.), it’s wise to review the condition of your credit reports before an official credit inquiry. Checking your own credit will never hurt your credit score. And it can be helpful to know what’s on your credit reports in advance so that there are no surprises at the time of your application.
Thanks to an amendment to the FCRA (known as the Fair and Accurate Credit Transactions Act or FACTA), you’re entitled to a free copy of your credit report from each credit bureau once every 12 months. You can visit AnnualCreditReport.com to claim these free reports. Through the end of 2023, the credit bureaus are voluntarily giving consumers free weekly credit reports through the same website.
It may also be helpful to try to improve your credit prior to a credit inquiry. On-time payments are always important. Working to pay down credit card debt might also be helpful, both from a financial and a credit score perspective.
How hard credit checks affect your score
A large number of credit inquiries could indicate that someone is a riskier borrower. According to research by FICO, consumers who have six or more hard credit inquiries may be up to eight times more likely to declare bankruptcy compared to those who haven’t applied for any new credit in the past 12 months.
Still, the impact from hard credit checks can vary. For most people, hard credit checks do not have a meaningful impact on their credit scores.
Less than 10% of your FICO Score is influenced by hard credit inquiries. Furthermore, only hard inquiries that have taken place in the past 12 months have the potential to impact your score in the first place.
What is rate shopping?
Credit score creators design scoring models with special logic to allow for rate shopping. If you’re letting lenders check your credit repeatedly because you’re looking for the best deal on financing, you shouldn’t be penalized for being a savvy consumer.
With FICO Scores, for example, you can apply for multiple mortgage, auto, or student loans within a 14-day period and the score will treat those inquiries as a single event. Newer versions of the FICO Score extend this rate-shopping window to 45 days. However, it’s up to each lender to choose the version of the FICO Score it uses to calculate your score.
Why you should check your credit reports regularly
Each of the major credit bureaus — Equifax, TransUnion, and Experian — maintains around 220 million consumer credit files. And, unfortunately, sometimes mistakes happen where credit reports are concerned.
According to the Consumer Financial Protection Bureau (CFPB) consumer complaint database, 225,873 reports were filed noting incorrect information in people’s credit reports. Credit reporting errors have the potential to damage your credit score, make lenders deny your applications, or cause you to pay higher interest rates, fees, and deposits when you qualify for financing.
Checking your credit reports won’t prevent credit errors from happening. Yet frequent credit reviews can at least help you spot any problems quickly.
If you discover mistakes or fraud on your credit report, the FCRA once again protects you. Per the FCRA, you can dispute credit errors with the appropriate credit bureau. The CFPB provides a free guide and templates to walk you through the process.
Frequently asked questions (FAQ)
When you attempt to check your credit report online, the credit bureau from which you’re attempting to access your information will ask you several identifying questions. If you don’t answer the questions correctly, you may be unable to access your credit report. However, if this occurs you download an Annual Credit Report Request Form and mail in a request for your credit file disclosures from Equifax, TransUnion, and Experian.
Hard inquiries aren’t worth a specific number of points where your credit score is concerned. Yet according to FICO, the addition of one hard inquiry will typically result in less than five points off of most people’s FICO Scores.
When you check your own credit report from Credit Karma (or elsewhere), it is a soft credit check. At the time of writing, Credit Karma provides users with credit reports from Equifax and TransUnion, along with VantageScore® 3.0 credit scores.
A soft credit inquiry will never have any impact on your credit score. So, you can check your own credit reports from Equifax, TransUnion, and Experian as often as you like without fear of credit score damage.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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