Hard and Soft Credit Inquiries Explained

There's a lot of talk about hard and soft credit pulls, especially when talking about signing up for new bank accounts or applying for any sort of credit account. Essentially these are credit inquiries into your credit score when a third party, such as a bank, would like to examine your credit history.

Essentially, a soft pull is a credit inquiry which does not affect your credit score in the lightest. You can have over a thousand soft pulls on your credit score, but it won't matter because they are not visible to anyone else checking your credit report, such as the Fair Isaac corporation which calculates your fico score. These soft pulls are done on a regular basis, often with out your knowledge.

Generally a soft credit score can be done by anyone else for a number of reasons. For example, if a credit card company or mortgage company would like to send you a pre approved loan offer, the will use a soft pull. Your current bank will use a soft pull to make sure you aren't opening dozens of other credit card accounts. When a bank wants to verify your identity when opening an account, usually they will do a soft pull. You are also doing a soft pull when you check your own credit history or credit score.

Since soft pulls do not affect your credit, it only makes sense that a hard pull would effect your credit. A hard pull only occurs when you have given express permission for one to occur. It's usually hidden in side some agreement you sign when you open up a new savings account or credit card offer and the like. If a hard pull is done on your credit, your FICO score will lower about 5 points for the next six months, and will also be visible to anyone checking your credit.

Whenever you apply for a credit card or other sort of credit line, you should expect to hard a hard credit inquiry performed. It has also become very a very common practice for banks and credit unions to also perform a hard pull. If you sign up for any sort of account, there's a good chance they will perform a hard pull as well.

If you don't plan on buying a house in the next 6 months or so, you probably don't have to be too worried about hard pulls, otherwise you should be very careful as to what new accounts and financial services you sign up for.