A credit inquiry—or credit pull—is a request made to any of the three credit bureaus for a copy of your credit report. There are two types: soft and hard pulls. The most important difference between them is that hard pulls affect your credit score and soft pulls don’t. How and why this happens is easier explained when you’re more familiar with each type of inquiry and its purpose.
Soft credit pulls can occur without you ever noticing. Don’t worry—that is perfectly normal. When a third party wants to know your credit report information, but isn’t doing so to decide whether they should grant you a loan, it’s considered a soft pull. Before hiring you, a potential employer will often do a soft pull to get a clearer idea of job candidates. Credit card companies will do the same before they send pre-qualified offers to individuals.
Just remember that when this type of request is made, it doesn't adversely affect your credit score.
When you complete an application for a loan, you’re authorizing the lender to pull your credit report. This type of inquiry is a hard pull. Similar to soft pulls, the lender receives the information on your credit report. The difference is that these inquiries do affect your credit score. A hard pull is an indication that you’re applying for credit, so it’s recorded on your credit report.
Understanding the way hard pulls are recorded on your credit report can help you protect your credit score from dropping dramatically. For instance, if you’re shopping around for a loan and apply to several lenders within a few weeks of each other, those inquiries will only be considered one hard pull and may lower your credit score slightly, but not significantly. However, if your credit search stretches out longer than a month and a half or you credit shop every few months, your score will eventually start to suffer because it may appear that creditors are rejecting you.* Those hard pulls can stay on your report for up to two years.
Stay informed and in control of your credit history by checking your credit report at least once a year, calling creditors listed on the report to ask questions about inquiries that aren’t familiar and only applying for credit you need and can afford.