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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Not all credit checks are created equal. In fact, not all of them have the same impact on , and knowing the difference could help preserve your credit. A —sometimes called a hard inquiry or a hard pull—is different from so-called . One is performed by prospective lenders, the other isn’t. One usually has a direct if temporary impact on your score, the other doesn’t. The difference is yet another wrinkle to consider in the already opaque system used to calculate credit scores. Hard credit check vs soft credit check
When you apply for credit—whether it’s a mortgage, a or a —the bank lender checks your credit history. That’s a hard credit check. A soft check, on the other hand, could come from checking your own credit score, an employer running a background check on you, or a store looking to prequalify you for a promotional rate. These types of checks do not affect your score. But every time a lender looks at your credit report, that’s recorded by the credit bureaus and can impact your . Whether it has an impact, and the extent of that impact, depends on several factors. Good credit history minimizes the impact of hard checks
The bureaus pay attention to how often you’ve applied for credit. Too many attempts at new financing might be an indication you’re a risky borrower; you might be short on cash or simply taking on too much debt. The effect on your score depends on a couple of factors: Borrowing history: If you have a solid track record of long-established credit, a hard check or two will probably have a minimal impact, if any. A shorter borrowing history with just a few lines of credit could be bad news, however: Each hard pull could knock as many as five points off a score, leading to higher interest rates and more expensive loans. Timing of the checks: If you shop around for the best interest rate, each lender you contact is likely to perform a hard pull. That many pulls in a short window of time can hurt your score. FICO says it controls for this by considering inquiries from multiple lenders for big-ticket purchases such as mortgages and car loans as a single “shopping period,” provided they are all made within a 30-day window. Timeliness and vigilance are key
Your credit report compiles all credit checks—hard and soft—for two years, but hard credit checks only impact your FICO scores for one year. The key to preventing hard credit checks from hurting your FICO score is to make sure your loan applications all fall within that month-long window. It’s also important to be vigilant about who’s looking into your borrowing history. As noted, there’s no penalty for checking your own credit score, and it’s possible to see a list of both hard and soft inquiries when you do. So, if there are hard credit checks that don’t look familiar, it’s important to check with the party that initiated them to make sure you’re not the victim of identity theft. Soft inquiries on the other hand, are much more common, and you’re likely to not recognize them. Pretty much every credit card offer you’ve ever received in the mail came after the issuer ran a credit check on you. SHARE: Mark Miller Related Articles