![Better](https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2Fe2da67fb77e4423989a8b49ac50cb0aa?{"fit":"thumb","width":100})
During mortgage pre-approval, lenders pull your credit report to assess your ability to pay back the debt. These credit inquiries come in two forms — soft and hard credit checks — and understanding their differences helps you maintain financial health and improve your chances of securing a loan with favorable terms.
In this article, you’ll discover what distinguishes soft versus hard credit checks, the events that trigger each type, and how to minimize the negative effects of hard inquiries on your credit score.
What’s the main difference between a soft and hard credit check?
Both types of inquiries provide snapshots of your credit profile, but they have unique consequences and characteristics. Here are the primary differences between hard credit pulls versus soft pulls:
| Soft credit check | Hard credit check |
|---|---|
| Doesn’t affect your credit score | Could temporarily lower your credit score |
| Used for checks that don’t open a new credit account, like self-evaluation and renting a home | Used any time you apply for credit, like getting a mortgage or opening a credit card |
| Generally doesn’t require permission (except some employment background checks) | Requires your permission |
| Stays on your credit report for one to two years | Stays on your credit report for two years |
| Can be run even if you have a credit freeze | Can be blocked if you have a security freeze |
What’s a soft credit inquiry?
Soft credit checks are a review of your credit report that don’t influence your score. They aren’t tied to an application for credit. While they appear on your report, they’re only visible to you. Unlike hard credit checks, these inquiries only provide basic information, like credit score and personal info like your name and address.
What triggers a soft check?
There are many events that result in a soft credit check, including:
— Buying insurance: Many insurance companies use a person’s credit score as a predictor of their reliability and claim risk. If your report demonstrates that you’ve had trouble paying bills on time or have a lot of existing debt, it signals to insurance providers that your finances may be stretched thin. This can result in higher premiums.
— Receiving promotional offers: Companies may perform soft inquiries before sending potential customers promotional offers. This is a common practice for credit card mailers and loan providers.
— Purchasing utilities: Utility companies check your credit profile to determine your reliability. If you have a spotty payment history, they may request a deposit to cover costs if you fall behind.
— Receiving background checks: Some employers use your credit background as an indicator of how you manage obligations and responsibilities. Unlike most types of soft credit checks, employers need your permission to pull your report.
— Renting a home: Landlords may run soft or hard credit checks to gauge potential tenants’ financial responsibility and predict their likelihood to pay on time. While soft inquiries are generally more common, ask which they perform before applying to avoid unwanted surprises.
— Checking your own credit report: Viewing your credit report yourself triggers a soft inquiry but provides the same data lenders get from a hard check.
How long soft credit inquiries last
While both soft and hard inquiries remain on your credit report for up to two years, soft checks don’t have the same influence. These pulls have no score impact and aren’t visible to others, so they can’t affect loan applications.
What’s a hard credit check?
A hard credit check is a request to view your credit report that temporarily affects your score. They offer an in-depth look at your financial information, including account balances, credit utilization, and payment history.
Hard credit checks lower your score by a few points because they imply you’re seeking new debts. However, the overall impact is minimal since the dip is temporary.
What triggers a hard check?
The most common types of applications that cause a hard inquiry are:
— Mortgages: Lenders pull a hard credit inquiry before making a final decision on a loan application. Pre-qualification requires only a soft credit check, while pre-approval may use either type.
— Credit cards: Every credit card application comes with a hard inquiry.
— Credit limit increases: If you request a credit limit increase, the provider may issue a hard credit check before approval to review whether your financial situation has changed since you opened the account.
— Auto loans: If you’re financing a car, submitting a loan application comes with a hard credit check.
— Student loans: Many applications for private student loans cause a hard inquiry. Most federal loans don’t, with the exception of the Federal Direct PLUS loans.
— Rentals: Credit inquiries for rental applications can be hard or soft. While every process is different, professional property management companies are more likely to request a hard check, and private landlords typically use soft ones.
How long hard credit inquiries last
Hard inquiries remain on your credit report for two years, but their effect on your credit score typically fades after only 12 months. Regularly review your report to monitor your score — in some cases, the effect can diminish in only a few months.
Keep in mind that too many inquiries in a two year period can amplify the negative impact and signal to lenders that you may be an unreliable borrower.
How to protect your credit score during hard credit checks
Finding ways around hard pulls is the best way to protect your score. For instance, some lenders use a hard inquiry during mortgage pre-approval, which can feel stifling or pressuring as you shop. Better’s pre-approval process has no effect on your credit because we use a soft pull until you decide to move forward.
If you choose to continue, we’ll run a hard credit check, but you can reduce its effect by grouping your applications. Keep your rate checks within a 14–45 day window, and FICO will treat hard inquiries as a single credit pull. Hard checks typically lower a score by roughly five points, so applying with multiple lenders at once damages your score less.
Use Better’s online platform, and apply in as little as three minutes without touching your score.
...in as little as 3 minutes – no credit impact
4 ways to maintain a healthy credit score
While there’s no other way to reduce the points a hard pull takes, here are a few ways to stay mindful and keep your credit profile in good standing:
— Checking your credit report regularly: Keeping a watchful eye on your credit profile ensures you catch discrepancies and mistakes before they affect potential loans.
— Taking advantage of pre-qualifications: Gather offers from lenders to get a sense of the interest rates and terms you might qualify for.
— Keeping new credit card applications to a minimum: FICO’s window for grouping hard inquiries only applies to mortgages, auto loans, and student loans. Each application for a new credit card adds a hard inquiry to your report, lowering your score and potentially making you look riskier to lenders.
— Taking on new credit carefully: Increasing your credit limit affects your financial profile because total debt burden and credit utilization ratio are key ingredients in calculating your score. If you’re considering applying for new credit while searching for a mortgage provider, make sure you can afford it without putting pressure on your finances.
How to dispute unauthorized hard credit checks
If you spot a hard inquiry on your report you don’t recognize, dispute it immediately to keep your record clean and prevent identity theft. Here’s how to do it:
— Contact the creditor: What looks like an incorrect inquiry may turn out to be legitimate. For example, a lender may run a credit report under the name of a parent company you’re not familiar with. Hard credit checks list the creditor’s name and contact information, so reach out as soon as possible to verify whether the inquiry is valid.
— File a dispute: If you confirm that a suspicious inquiry is from an unknown source, file a dispute with the credit bureaus to get it removed.
— Stay vigilant: Check your credit report regularly and set up fraud alerts so you can act fast if discrepancies show up.
— Set up a security freeze: A freeze blocks any new hard checks on your credit report and is a common practice if you think you may be a victim of identity theft. It doesn’t affect your score, and you can lift it at any time.
Explore mortgage options and maintain your credit with Better
Protecting your credit score is the key to landing great interest rates with favorable terms. By understanding the difference between hard inquiries versus soft inquiries, you can avoid unnecessary pulls, group multiple checks, and improve your financial health.
When you apply for pre-approval with Better, we run a soft inquiry that has no impact on your credit so you can shop around without damaging your financial profile. Every mortgage comes with transparent fees, fast closing, and 24/7 support to help you through each step.
Apply in as little as three minutes with Better and keep your credit score secure.
...in as little as 3 minutes – no credit impact
FAQ
How does a soft vs. a hard credit check affect my credit score?
A soft inquiry doesn’t affect your credit score, while a hard one temporarily lowers it. Each hard pull reduces your score by five points or less, and the impact disappears after about one year.
How long do soft and hard credit checks stay on a credit report?
Both soft and hard credit inquiries stay on your report for up to two years, although soft pulls are only visible to you.