Key takeaways
- A soft inquiry happens when your credit is reviewed for a reason other than a new application, and it does not affect your credit scores.
- A hard inquiry usually happens when you apply for credit, and it may lower your scores slightly for a limited time.
- Several inquiries for the same kind of loan made within a short period are often counted as one.
- A hard inquiry you do not recognize could be a sign of identity theft and is worth looking into.
What a credit inquiry is
Each time a person or company requests your credit report, the request is recorded as an inquiry. The federal Fair Credit Reporting Act limits who can see your report and for what purposes. Inquiries fall into two broad groups, soft and hard, and the difference comes down to why your report was requested.
Soft inquiries
A soft inquiry, sometimes called a soft pull, occurs when your credit is reviewed but you have not applied for new credit. Soft inquiries do not affect your credit scores. They can appear on the copy of your report that you request, but lenders reviewing your report generally do not see them. Common examples include:
- Checking your own credit report or score
- Prescreened offers, where a company reviews limited credit information to decide whether to send you an offer
- Account reviews by lenders you already do business with
- Many prequalification tools
- Employment screenings, which require your written permission
Hard inquiries
A hard inquiry, or hard pull, usually happens when you apply for credit and a lender checks your report to make a lending decision. Examples include applications for:
- A mortgage, an auto loan or a personal loan
- A new credit card
- A credit limit increase, depending on the card issuer
- Many loan preapprovals
A hard inquiry can lower your credit scores slightly. For most people the effect is small and temporary. Hard inquiries can stay on your credit report for up to two years, although FICO scores factor in only those from the past 12 months. Several hard inquiries in a short period can have a larger combined effect, especially for someone with a short credit history.
| Soft inquiry | Hard inquiry | |
|---|---|---|
| Usually triggered by | A review not tied to a new application | Your application for new credit |
| Effect on scores | None | May lower them slightly, for a limited time |
| Seen by other lenders | Generally not | Yes |
| Typical examples | Checking your own credit, prescreened offers | Loan and credit card applications |
Rate shopping and the single-inquiry window
Scoring models recognize that comparing offers is sensible. When you apply with several lenders for the same type of loan, such as a mortgage, an auto loan or a student loan, within a short window, many scoring models count those inquiries as one. Depending on the model, that window is commonly between 14 and 45 days. Credit card applications are generally not grouped this way, so each one can count on its own.
Checks that can go either way
Some situations do not fit neatly into either group. Rental applications, utility service and mobile phone accounts may involve a soft or a hard inquiry, depending on the company. Preapprovals are often, but not always, hard inquiries. Asking remains the only reliable way to know.
Be cautious with any lender that says it will not look at your credit at all. Some legitimate products work that way, but the claim is also common in high-cost lending and in scams, so read the terms closely.
What to do about an inquiry you do not recognize
Review your credit reports from time to time. You can get them free from each nationwide bureau through AnnualCreditReport.com. If you see a hard inquiry you did not authorize, first check whether it came from a lender you applied with under a different business name. If it is still unfamiliar:
- Contact the credit bureau that shows the inquiry and dispute it.
- Look for other warning signs, such as accounts you did not open.
- If you believe someone is using your information, report it at IdentityTheft.gov, the federal government's identity theft resource.
- Consider placing a fraud alert or a credit freeze.
Credit freezes and fraud alerts
A credit freeze restricts access to your credit report, which makes it harder for someone to open new accounts in your name. Placing and lifting a freeze is free under federal law, and a freeze does not affect your credit scores. You will need to lift it temporarily before applying for new credit yourself. A fraud alert is a lighter measure: it asks lenders to take extra steps to verify your identity before opening an account.
Opting out of prescreened offers
If you would rather not receive prescreened credit offers, you can opt out for five years or permanently. The Federal Trade Commission explains how on its consumer website. Opting out does not affect your ability to apply for credit whenever you choose.
Helpful official resources
Independent government and official sources. Prequalee is not affiliated with any of these organizations.
- AnnualCreditReport.comThe source for free credit reports authorized by federal law.
- IdentityTheft.govThe federal government's resource for reporting identity theft.
- Federal Trade Commission consumer adviceConsumer guidance from the nation's consumer protection agency.
- Consumer Financial Protection BureauThe U.S. government agency dedicated to consumer financial protection.
This guide is general educational information, not financial or legal advice. Lending criteria vary by lender and loan type, so confirm details with any lender you are considering. Spotted something that needs correcting? Email info@prequalee.com.
