Soft Vs. Hard Credit Check

If you are like most young couples, you're probably thinking about buying a house and starting a family at some point in your life. Now's the time to build your credit rating up and show some responsibility in your financial transactions. Part of having a high credit score involves obtaining credit cards and loans and paying them on time. Sometimes when you apply as a borrower, it is reported to the major credit bureaus and can negatively affect your rating. Knowing when this occurs is an important step in understanding how your credit score is calculated.

Soft Credit Check

A soft credit check is one that you do not initiate yourself. You will probably receive many offers for credit cards or other loans. Before approaching you to borrow money, creditors check your credit report and score to ensure you have a history that proves you'll make your payments on time. This process is legal, but it's done without your approval or knowledge. In addition, your existing creditors periodically check your report to see if you are maintaining responsible borrowing. If they discover that you have overspent and are neglecting repayment of loans, your interest rate and other terms can be at risk.

Hard Credit Check

If you are actively applying for credit cards or loans, the applications you sign give lenders consent to check your credit history and score. This is when they make a hard credit check. The results will help creditors determine if you should be approved or denied to borrow money. Hard credit checks should not happen without your approval. However, when you request certain financial arrangements, such as opening a checking account, you might not realize that doing so can result in a hard pull on your credit report.

Credit Impact

A soft credit check does not have an impact on your credit report or score, and creditors who request your history will not see it listed. However, when you review your own report, the names of the companies that requested information about you are disclosed. Order your credit history from the three major credit bureaus at to check who has made inquiries. A hard credit check can negatively impact your score. The number of points you lose depends on your individual situation but can average about five points. A hard pull also stays on your record for about one to two years.

Multiple Inquiries

If you are shopping for the best loan, such as a mortgage, contact different lenders within a short time frame for your hard credit checks. If you request many credit inquiries within a certain period of time, such as two weeks, the impact to your credit score is less significant because it indicates to the credit bureaus that you are trying to find the most favorable terms for a loan, and that you are not interested in opening many lines of credit. Several credit checks during this time count only as one lost point for credit score purposes.


About the Author

Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.