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What is the Difference Between a Hard or Soft Credit Inquiry? It's important to understand hard and soft credit inquiries to help improve your credit score. Learn about the difference in hard and soft credit checks. hard credit inquiry, what is a hard credit inquiry, soft credit inquiry, what is a soft credit inquiry, difference between hard and soft credit check Bank of America Hard and soft credit inquiries: What they mean to your credit score Hard and soft credit inquiries: What they mean to your FICO (or credit score) Understanding credit inquiries can help you protect your credit When you apply for a new loan or credit card, you are probably aware that the potential creditor will pull your credit report and score. What you may not know is how those credit checks can impact your credit score and, consequently, the interest rate you pay. Fortunately, you can minimize these negative effects by learning the difference between so-called "hard" and "soft" credit checks and how to keep the hard ones to a minimum. Credit inquiries defined There are two types of credit inquiries: hard and soft. When you apply for credit - be it a store credit card, a car loan or a home loan-the lender pulls your credit report. This is a hard credit inquiry. A soft credit inquiry happens when your credit report is checked but you haven't applied for credit. For example, insurance companies or potential landlords may check your credit report to assess risk; potential employers may do background checks and credit card companies may check your report to send you pre-approved promotional offers. The science of hard and soft credit inquiries Soft inquiries do not affect your credit score. Hard inquiries do. Here's how it works: Each time you apply for credit, your credit score drops a little bit-usually less than five points per inquiry, according to myFICO.com. That's because seeking new credit can make you seem like more of a risk for lenders. Hard credit checks are occasionally conducted multiple times for a specific item like a car loan or a mortgage. These can happen within a certain time frame-FICO calls them shopping periods and while each lender may use a different formula to calculate a shopping period, it's typically 14-45 days. This means that multiple inquiries during this time are usually treated as a single inquiry on your credit score. The impact of hard inquiries New lines of credit represent only 10 percent of your score, according to myFICO.com, so the damage to your credit score from hard inquiries is typically minimal. But that doesn't mean you're in the clear to rack up hard credit inquiries: ? Inquiries can have a greater impact for someone with a short credit history and few accounts than for someone with a long history and wide range of credit experience. ? To a lender reviewing your credit report, many hard credit inquiries in a short period of time may indicate high credit risk, which could appear to creditors as if you are trying to get a lot of credit in a short period of time. (The exception is if you are rate shopping for a car, student or home loan during a short time period.) ? Even small drops in your credit score can result in higher interest rates when you borrow, which means you will pay more over the life of a loan. ? While credit inquiries are factored into your credit score for only 12 months, they remain on your credit report for two years. You can learn more about what goes into a credit score by watching this video. Protect your credit To keep your credit score healthy, limit the number of hard inquiries. Say "no, thanks" to those store credit cards offered to you at checkout if they don't make sense in your larger financial picture. If you're going rate shopping for a car or house loan, make sure to do so within a 14- to 45-day window so that multiple inquiries will be recorded as one. Also keep an eye on your credit report. If you see a hard inquiry on your report that you did not initiate, take action to protect yourself from identity theft.

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Hard and soft credit inquiries: What they mean to your credit score

Couple at the computer reviewing their hard and soft credit inquiries

Understanding credit inquiries can help you protect your credit

When you apply for a new loan or credit card, you are probably aware that the potential creditor will pull your credit report and score. What you may not know is how those credit checks can impact your credit score and, consequently, the interest rate you pay. Fortunately, you can minimize these negative effects by learning the difference between so-called "hard" and "soft" credit checks and how to keep the hard ones to a minimum.

Credit inquiries defined

There are two types of credit inquiries: hard and soft. When you apply for credit — be it a store credit card, a car loan or a home loan—the lender pulls your credit report. This is a hard credit inquiry.

A soft credit inquiry happens when your credit report is checked but you haven’t applied for credit. For example, insurance companies or potential landlords may check your credit report to assess risk; potential employers may do background checks and credit card companies may check your report to send you pre-approved promotional offers.

The science of hard and soft credit inquiries

Soft inquiries do not affect your credit score. Hard inquiries do.

Here’s how it works: Each time you apply for credit, your credit score drops a little bit—usually less than five points per inquiry, according to myFICO.com. That’s because seeking new credit can make you seem like more of a risk for lenders.

Hard credit checks are occasionally conducted multiple times for a specific item like a car loan or a mortgage. These can happen within a certain time frame — FICO calls them shopping periods and while each lender may use a different formula to calculate a shopping period, it’s typically 14–45 days. This means that multiple inquiries during this time are usually treated as a single inquiry on your credit score.

The impact of hard inquiries

New lines of credit represent only 10 percent of your score, according to myFICO.com, so the damage to your credit score from hard inquiries is typically minimal. But that doesn’t mean you’re in the clear to rack up hard credit inquiries:

  • Inquiries can have a greater impact for someone with a short credit history and few accounts than for someone with a long history and wide range of credit experience.
  • To a lender reviewing your credit report, many hard credit inquiries in a short period of time may indicate high credit risk, which could appear to creditors as if you are trying to get a lot of credit in a short period of time. (The exception is if you are rate shopping for a car, student or home loan during a short time period.)
  • Even small drops in your credit score can result in higher interest rates when you borrow, which means you will pay more over the life of a loan.
  • While credit inquiries are factored into your credit score for only 12 months, they remain on your credit report for two years. Learn how to improve your credit score.

Protect your credit

To keep your credit score healthy, limit the number of hard inquiries. Say "no, thanks" to those store credit cards offered to you at checkout if they don't make sense in your larger financial picture. If you're going rate shopping for a car or house loan, make sure to do so within a 14- to 45-day window so that multiple inquiries will be recorded as one. Also keep an eye on your credit report. If you see a hard inquiry on your report that you did not initiate, take action to protect yourself from identity theft