Soft pull vs hard pull: does checking loan offers hurt your credit score?

The short answer: checking loan offers hurts your credit score only when the check is a hard inquiry, and even then the damage is small and temporary. A soft inquiry, which is what most prequalification tools and offer-comparison steps use, is invisible to other lenders and does not change your score at all. The longer answer, which is worth five minutes if you are about to apply for a loan, is below.

What a credit inquiry is

Every time someone looks at your credit report, the credit bureau records an inquiry: who looked, and when. There are two kinds, and the difference is not what the lender sees but why they looked and who else can see that they did.

A soft inquiry (a soft pull) happens when your report is checked for a reason other than a credit application you made. Checking your own score, a lender pre-screening you for a mailed offer, an existing card issuer reviewing your account, a landlord or an employer running a background check with your permission, and a lender prequalifying you at your request are all soft. Soft inquiries appear only on the version of the report you see; other lenders do not see them, and the scoring models ignore them.

A hard inquiry (a hard pull) happens when you apply for credit and authorize the lender to obtain your report to make a lending decision. Personal loan applications, credit card applications, auto loans, mortgages and some rental applications are hard. Hard inquiries are visible to any lender that pulls your report, and the scoring models count them.

What a hard inquiry actually does to your score

Less than most people fear. FICO’s published guidance is that for most people one additional hard inquiry takes fewer than five points off the score. The inquiry stays on the report for two years, but FICO only counts inquiries from the past twelve months, and the weight fades over those months. Inquiries in total make up a small slice of the score, well behind payment history and how much of your available credit you are using.

Where inquiries bite is in clusters. Several hard pulls in a few weeks, each for a different loan or card, are read by the models as a sign that you are taking on a lot of new debt at once, and the combined effect is larger than the sum of the parts. That pattern also shows up on the report itself, and a human underwriter reading it will draw the same conclusion the model did.

Why one hard pull is priced differently for different loans

The scoring models know that people shop around for a mortgage or a car loan, so they group inquiries of those types. FICO treats multiple mortgage, auto or student loan inquiries within a window as a single inquiry; the window is 14 to 45 days depending on the version of the model. VantageScore folds all inquiries of any type within a 14-day window into one.

The part that surprises people is that FICO’s grouping does not cover personal loans or credit cards. Under most FICO versions, three personal loan applications in a week are three inquiries. That is exactly why the order in which you shop matters: compare estimated offers using soft pulls, then submit one formal application for the offer you intend to take.

How to tell which kind a lender is doing

Lenders are not always explicit, but there are reliable signs.

• The words used. “Prequalify”, “check your rate”, “see if you qualify” and “will not affect your credit score” almost always mean a soft pull. “Apply”, “submit application” and language authorizing the lender to obtain your consumer report usually mean a hard pull is coming, sometimes right away and sometimes only after you accept an offer.
• What you are asked to sign. A hard inquiry requires your authorization. If the form includes an authorization to obtain consumer reports from consumer reporting agencies, read it as a hard pull unless the lender says otherwise.
• What comes back. A prequalified estimate that says “subject to verification” is soft. A firm offer with a specific APR, amount and term that you can sign generally means the lender has already made its full check.
• Your report afterward. If you want certainty, pull your own report a few days later. Hard inquiries are listed by date with the lender’s name. You can get your reports free every week from all three bureaus through AnnualCreditReport.com.

If a lender will not tell you which kind of check it uses, that is itself an answer about how the rest of the relationship will go.

What happens when you use a loan-matching form

Comparison sites and matching forms sit in front of many lenders, so it pays to know what the form itself does and what happens after you submit it.

LoanAdvice is not a lender, and LoanAdvice does not obtain your credit report. When you submit our request form, LoanAdvice shares the information with its lending partners and their service providers so they can decide whether to present an offer. A lending partner may use a soft inquiry to prescreen your request, a hard inquiry if you go on to accept an offer, or alternative data such as bank account history instead of the bureaus. Which one applies is set out in each lender’s own terms, and our credit authorization disclosure describes what you agree to when you submit the form.

The practical upshot is the same as with any other application: submitting a request does not, by itself, add a hard inquiry, but accepting an offer generally does, and you should read the lender’s language before you accept.

Shopping for a loan without paying for it in points

1. Check your own reports first. Free, soft, and it catches errors that would otherwise cost you a decline or a higher rate. Our guide to getting a $2,000 loan with bad credit covers what to look for.
2. Prequalify with more than one lender. Soft pulls are free in every sense. Collect estimated APRs, fees and terms side by side.
3. Compare on total cost, not on the payment. The estimated APR and term tell you what the loan will cost over its life. Our article on what APR means and how to compare offers has a worked example.
4. Submit one formal application. Once you have chosen, apply to that lender only. If it declines you, move to the next one rather than applying to several at once.
5. Give the inquiry time to fade. If the loan can wait a few weeks, let earlier inquiries age before adding a new one, especially if you plan to apply for a mortgage or a car loan soon after.

The bottom line

Checking offers through soft pulls costs nothing and tells you most of what you need to know. A hard pull is the price of a real application, and one of them is a few points for a few months. The mistake is not the hard pull itself; it is a string of them, made because the shopping was done with applications instead of prequalifications. Shop first, apply once, and the score will barely notice.