Soft pull or hard pull? What each one does to your credit score

You have probably seen both phrases on forms and in ads and nodded along. The difference is worth a few minutes of your attention, because one leaves your score alone, the other can nudge it, and the page doesn’t always say which one you’re agreeing to.

The difference is the reason, not the file

Every time someone looks at your credit file, the bureau records it. That record is called an inquiry. What matters is why the looking happened, because the reason sorts it into one of two piles.

A soft inquiry is a review. The Consumer Financial Protection Bureau lists the usual ones: a lender or insurer checking an account you already have, a prescreening for an offer you did not ask for, an employer screening you, and you asking for your own report. The CFPB is plain about the effect: “These will not affect your credit scores.”

A hard inquiry is a decision. It is “often” what a lender does after you apply for credit, because the lender needs your file to decide whether to say yes. Those inquiries can move your score, because, as the CFPB explains, most scoring models look at how recently and how often you apply for credit.

So the file is the same file. A soft pull is someone reading it. A hard pull is someone deciding on you.

What does a hard pull do to your score?

Less than people fear, and more than nothing. FICO says that for most people one additional credit inquiry will take less than five points off their scores. Hard inquiries stay on the report for up to two years, but FICO scores only count them for one.

FICO is careful to add that a hard inquiry doesn’t cost a set number of points. The effect depends on the rest of your file. If you have a long history and several healthy accounts, one inquiry barely registers. If your file is thin, it can matter more. And the pattern matters: a cluster of applications in a short stretch looks different to a scoring model than one application on its own.

There is a well-known exception, and it’s narrower than it sounds. FICO treats several inquiries for the same kind of loan as a single one when they land within a short window, 45 days for newer versions of its score and 14 days for older ones, which some lenders still use. FICO names the loan types: mortgages, auto loans and student loans. If you’re shopping for business funding, don’t assume the window covers you. Ask each lender what kind of check it runs before you let it run one.

Where soft pulls show up

More places than many people realize, and usually without any effort on your part. You check your own report: a soft pull. A card company sends you a prescreened offer: a soft pull. A lender you already do business with reviews your account: a soft pull. A tool that estimates what you might qualify for, before you apply, can use one too.

The detail worth remembering is who sees them. According to the CFPB, soft inquiries are shown only to you when you review your own report, and they aren’t visible when others buy your credit report. A lender looking at your file later cannot tell that you were checked on Tuesday.

How to tell which one you are agreeing to

You won’t always be told in so many words, so here is the short routine. It takes a minute and it’s worth the minute.

1. Read the sentence next to the button. A fair form says what it will do. Language about a “soft pull” or “soft inquiry,” and about your score not being affected, is a good sign. A form that only says you authorize a “credit inquiry” or that you’re “applying” should be read as a hard pull until it says otherwise.
2. Ask the direct question. “Is this a soft inquiry or a hard inquiry, and will it show on my report to other lenders?” A lender that cannot answer that plainly has told you something.
3. Treat “apply” as a hard pull. The word usually means a lender is deciding. Pre-qualification can mean different things at different lenders, which is the subject of its own article, Pre-qualification is not an application.
4. Save the hard pull for the lender you’ve chosen. Learn where you stand first, with soft inquiries. Spend a hard one when you know it’s going to the right place.

Your personal file matters for a business, too

Owners are sometimes surprised that a business loan can turn on their personal credit. The federal rules for SBA loans, for example, say that holders of at least a 20 percent ownership interest generally must guarantee the loan. When you guarantee a loan, the lender has every reason to look at you as well as your company. Other lenders set their own requirements, and they differ. So when you ask how a lender will check, you’re asking about your own file.

Soft first, hard once

Soft and hard pulls aren’t good and bad. They are two halves of a sensible order of operations. Start soft: look at your own report, get an estimate of where you stand, see what range of funding fits a business like yours. Then go hard, once, where you actually want to apply. What lenders weigh first shows how to read the estimate.

That is how we think about it at FundingRange. Every range we show comes from a soft pull you agree to, and the pull itself does not affect your score. The range is an estimate, not an offer. What you do with it is up to you, and you can do all of it without a hard inquiry until you choose to.

Before you click the next button, find out which kind of check it is. Look at your own file first. Apply deliberately, not everywhere at once. If a form won’t say what kind of pull it runs, that’s a reason to look elsewhere.