Differences between “soft” and “hard” credit inquiries

The score of credit It is one of those aspects that you have to know how to take care of if you hope to get financing, increase your wealth and improve your quality of life. In this sense, we help you to know how the soft and hard credit inquiries (hard and soft credit inquiries) about your history.

Article content

1. What is a soft credit inquiry?
2. What is a hard credit inquiry?
3. Recommendations on soft and hard consultations

What is a soft credit inquiry or soft inquiry?

Also known as “soft pull”, These types of inquiries do not affect your credit score and sometimes they happen without you knowing.

This often happens when you receive a credit card offer in the mail, when you review your credit file, when a potential employer checks your history, or when a lender conducts pre-approval.

In essence, a soft inquiry It represents any request for information about your credit history by an entity, company or person that is not a potential lender deciding if you receive the go-ahead or not.

According to Fair Credit Reporting Act, these soft queries can only be seen by you (with exceptions) and they remain up to 2 years after being executed.

A soft credit inquiry or soft credit inquiry DOES NOT affect your score

We have previously commented that you can check your score or credit report once a year and for free on the official website that brings together the 3 available bureaus (Equifax, Experian and TransUnion).

There are also other free ways by which you can review your file and that do not take points away for doing so. This is the case of many financial institutions that, by contracting one of their products, usually a credit card, allow you to consult your score whenever you want.

What is a hard credit inquiry or hard inquiry?

A tough credit inquiry affect your score depending on the frequency with which it occurs. Generally, these kinds of reviews can happen when you apply for a large personal loan, such as a mortgage, personal loan, car credit, or a credit card.

The fundamental difference with respect to the one mentioned above is that they will ask for your consent to carry it out. This also means that the review will be part of your credit report, and it is possible for anyone to see it.

It’s normal that a hard inquiry I remove up to 5 points from score FICO, but this depends on the frequency of the consultations. For example, if you are comparing personal loans, all the reviews within a period of 30 to 45 days are considered as one.

A tough credit inquiry or hard credit inquiry DOES affect your score

In relation to VantageScore, which is another classification similar to FICO, also has a grace period so you can review the best options available for financing.

In this particular case, the time is shorter and a hard query for this parameter is less favorable, being able to remove 10 to 20 points from your credit score.

Finally, the logical recommendation is to try to avoid as many “hard” queries so as not to affect your credit history. Although the fact that a few points are taken from you may not be relevant when you have an excellent reputation, if you have regular or bad credit every small loss will be much more difficult to recover from banks or lenders.

Recommendations on soft and hard consultations

It is natural to feel some concern if a company or bank could execute a hard inquiry to apply for a personal loan for a considerable amount.

Before making any request to a bank, we recommend:

• Ask. It costs you nothing to talk to the person in charge to find out if they will need a soft or hard consultation to start the process or secure the funds. This also applies when you see an inquiry on your credit report that you don’t recognize.
• Find out about the requirements. Before launching an application for a loan or a credit card, it is important to know all the information we can about it. If you demand a credit level above yours, better not try it, because you will surely be rejected, which will not look good on your report.
• Take advantage of the “loan shopping“. We always advise you to shop before deciding on considerable financing. However, you have to carry out the investigation within a reasonable time. Although they will apply at least one hard inquiry, using this benefit reduces the negative impact on your history.

When it comes to taking care of your personal finances, you already know that tough credit inquiries are the only ones that can affect your history. Therefore, if you are trying to recover or improve your score, you should be alert to these types of situations. It is essential to check your score frequently, be cautious about the frequency of requests and only make commitments that you can pay.

While the hard and soft credit inquiries they do not show great differences, it is knowledge that will keep your economy healthy. For any other research on banking products, you can rely on the Business Blog comparator and choose the most favorable financing conditions.