Soft vs. Hard Credit Bureau Inquiry?
Credit Bureaus Scores and Inquiries
Credit inquiries are an important aspect of the credit process that enable creditors to evaluate your creditworthiness.
However, not all credit inquiries are the same, and understanding the differences between them is crucial.
In this blog post, we will discuss the difference between soft credit inquiries and hard credit inquiries.
Soft Credit Inquiry
A soft credit inquiry, also known as a soft pull, is a credit inquiry that does not impact your credit score.
Soft inquiries are typically made by lenders or financial institutions to check your credit report for pre-approval offers, employment verification, or to monitor your creditworthiness.
They may also be initiated by you, such as when you check your own credit report or when a company checks your credit report as part of a background check.
Soft inquiries do not require your permission and can be performed without your knowledge.
They are recorded on your credit report but do not affect your credit score.
Additionally, they are not visible to other lenders or creditors and do not affect your ability to obtain credit in the future.
Hard Credit Inquiry
A hard credit inquiry, also known as a hard pull, is a credit inquiry that can impact your credit score.
Hard inquiries occur when you apply for credit, such as a credit card, loan, or mortgage.
They are initiated by lenders or creditors to evaluate your creditworthiness and determine if you qualify for credit.
Hard inquiries require your permission, and you must authorize them before they can be performed.
Multiple Credit Bureau Inquires
Unlike soft inquiries, hard inquiries are recorded on your credit report and can remain on your credit report for up to two years. They can also affect your credit score and can lower it by a few points.
Multiple hard inquiries within a short period of time can indicate to lenders that you are actively seeking credit and may be a higher risk borrower, which can negatively impact your ability to obtain credit in the future.
Conclusions and Further Thoughts
In conclusion, understanding the difference between soft credit inquiries and hard credit inquiries is important for maintaining good credit health.
Soft inquiries are harmless and do not impact your credit score, while hard inquiries can impact your credit score and may affect your ability to obtain credit in the future.
If you are unsure about the type of credit inquiry being performed, it is always best to ask the lender or creditor for clarification.
Sincerely,
Michael
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE
