Sept 7, 2022
You probably understand that when you apply for a loan, the lender will check your credit report. You may also know that a credit inquiry could have an adverse effect on your credit score. However, did you know that there are two types of credit checks? One type is referred to as a “hard” credit inquiry and the other is a “soft” credit inquiry. A hard credit pull may adversely affect your credit score while a soft credit inquiry will not affect your score.
Hard and soft credit inquiries are typically done for different reasons. A hard credit check is generally done if you have applied for a new form of credit such as a loan or credit card. However, a soft credit inquiry may be performed for different reasons, including the following examples:
- You inquire about interest rates from a lender, but you do not submit an application for new credit
- One of your current creditors checks your credit because they are considering whether to offer you a credit line increase
- You specifically request a soft-pull pre-approval with a lender
- A potential employer does a background check with your permission
- You check your own credit.
There are some situations, such as when you open a new bank account or rent an apartment, when either a hard or soft inquiry may be made. Utility, cable, internet, and cellphone providers might also check your credit history. You can ask these providers what, if any, type of inquiry will be made.
What is Included in a Soft Credit Inquiry?
A soft credit check shows much of the same information as a hard credit inquiry, including personal loans, student loans, credit card balances, lines of credit such as a home equity line of credit, any late payments, tax liens, and bankruptcy filings. Rent payments and medical bills owed are not reported to the three credit bureaus (Experian, TransUnion, and Equifax).
What’s Excluded from Credit Inquiries?
Neither soft nor hard credit checks show personal information such as age, marital status, medical information. Reviewers of credit reports can only see if there has been any negative credit history such as not paying bills or filing for bankruptcy.
Viewing Your Own Credit Inquiries
You can view both hard and soft credit inquiries on your credit reports. A free copy of your report is available from each of the three credit reporting agencies once per year at AnnualCreditReport.com. However, keep in mind that if a credit inquiry was only made to Experian, for example, it will not show up on the other two credit agencies’ reports.
When Multiple Credit Inquiries Count as One
When you shop for a new mortgage or auto loan, credit agencies consider it as only one hard inquiry if it occurs in a 14 to 45 day period. However, a hard inquiry may affect your credit score even if you are denied a loan or simply decide not to take one out.
Hard inquiries will remain on your credit report for two years, but the impact on your total credit score is usually minimal and will only last for a few months if no new negative information is reported. Credit reporting agencies typically only consider hard inquiries from the previous twelve months when calculating your credit score. Alternatively, you can have numerous soft credit inquiries that will not affect your credit score.
Are you looking for a personal loan for a home renovation, automobile, or debt consolidation? Contact the Mariner Finance team today and experience quality customer service and timely responses to your questions.
The information provided in this article does not constitute financial advice and is provided for educational purposes only without any express or implied warranty of any kind. This article is not intended as legal, tax, investment, or any other advice, and Mariner Finance does not offer credit repair services. Consider talking with an appropriate qualified professional for specific advice.
Blog posts are for informational purposes only.