Understanding Soft and Hard Credit Checks

Ever wonder whether checking your credit score will lower it?

Well, there’s good news. It won’t.

This is called a soft credit check and it should be done regularly, at least once a year.

Why?

It can help you detect any inaccurate or incomplete information and even fraudulent activity like someone trying to open an account in your name. If there are any inquiries that you don’t recognize or changes you didn’t make to personal information, you can file a dispute to have them corrected.

A soft inquiry also helps you better understand your current credit position, including what lenders are seeing, so that when you require a hard inquiry there are no surprises.

A hard check or pull provides more information than a soft one and occurs as part of a loan application process. For instance, when you apply for a new credit card, car loan or mortgage. A company makes a request to review your credit report to decide if they will lend you money and how much interest they will charge you to borrow.

This type of query will impact your credit score, usually dropping it by about five points. The negative effect is temporary, lasting typically one year, though it may stay on your credit report for up to 36 months.

While a single check might not hurt your score much, many hard checks can, though it depends on the loan you’ve applied for. When shopping for a mortgage, multiple inquiries for the same purpose within a certain period of time are generally counted as one inquiry. However, a timeframe generally applies, meaning the checks must be done within a specified number of days, often between 14 and 45, to count as a single check.