A common question about credit is the difference between a hard pull and a soft pull. Knowing the difference between the two can have a major impact on your credit.
What is a credit pull?
When people refer to “pulls,” they are referring to inquiries. An inquiry or pull occurs when there is a request by an institution for your credit from the credit bureaus. This normally happens when you fill out an application for something. For example, when you apply for a credit card, you are giving the credit card company permission to “pull” your credit report. This pull will report an inquiry on your credit report.
These “pulls” are a key part of the underwriting process. The institution needs your permission to pull your report so they can see if you are eligible for credit with their company. This includes credit card companies, loans, car dealerships, etc.
The main difference is that a hard pull will show on your credit report as an inquiry and a soft pull will not. Let’s take an in-depth look at the two.
What is a hard pull?
When you fill out an application for a credit card, auto loan, mortgage, etc., you have to fill out an application for the lender. On the application, you will enter your full social security number, name, address and more. The lender will pull your credit report from one of the three major credit bureaus; Equifax, Experian or TransUnion. The lender will see your credit score and a detailed credit report. It gives the lender comprehensive look at your credit history. This is called a hard pull or inquiry.
Each hard pull can be harmful to your credit score. It usually causes a small credit score decrease. This is due to the fact of inquiries being a determining factor on your credit report. These credit inquiries can remain on your credit report for 2 years. Having too many inquiries can in a short period of time can make your report look unfavorable for new lenders.
What is a soft pull?
Soft pulls or inquiries are not included on your credit report. It won’t affect your credit score at all. They normally occur when you check your own credit report or score. With a soft pull, someone else won’t see your full credit report or score.
A soft pull can also occur when you check for pre-qualified offers. For example, Discover Card has an application to fill out to see if qualify for one of their credit cards. Generally, you will not supply your full social security number. Based on the snapshot that Discover receives, they will provide you with a list of credit cards you could be approved for.
If you are looking for new credit, it’s a good way to check to see if you qualify for a card before completing an application. Note, this does not guarantee that you will be approved if you prequalify. If you prequalify for a card, you will have the option to apply. You will then fill out the application and apply. Once you apply, a hard inquiry will appear on your credit report.
Summary
Knowing the difference between a hard pull and a soft pull can help your credit score and apply for new credit. While hard inquires can affect your credit score, the decrease in your credit score is minimal. Inquiries make up a small percentage of your credit score.
