What’s the Difference Between a Soft and a Hard Inquiry?

When you apply for credit, the lender will almost always make a hard inquiry on your credit report. But what exactly is a hard inquiry? And how does it differ from a soft inquiry?

Hard Inquiry

A hard inquiry is when a lender requests your credit report from the credit reporting agency to make a lending decision. This can be for a new credit card, a loan, or a mortgage. Hard inquiries stay on your credit report for two years but only impact your credit score for the first 12 months.

Pros and Cons of a Hard Inquiry

There are pros and cons to having a hard inquiry on your credit report.

• The main pro is that it can help you get approved for new credit. Lenders want to see that you’re using credit responsibly, and a hard inquiry is one way they can gauge that.
• The main con is that hard inquiries can damage your credit score. Each hard inquiry can take up to five points off your score, making it harder to get approved for new credit in the future.

A soft inquiry is when a lender requests your credit report but does not make a lending decision. This can happen when you check your credit report or when a lender checks your report for pre-approval offers. Soft inquiries do not impact your credit score, and they stay on your credit report for two years.

Pros and Cons of a Soft Inquiry

There are only pros to having a soft inquiry on your credit report. As mentioned before, checking your credit report is one way to monitor your credit and ensure there are no inaccuracies. And if you’re shopping around for a loan, multiple soft inquiries within 14 days will only count as one hard inquiry.

Bottom Line

Now that you know the difference between a soft and complex inquiry, you shouldn’t worry too much about hard inquiries because they’re a normal part of applying for credit. And as long as you manage your credit responsibly, it shouldn’t significantly impact your credit score.