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Although they may sound like two different textures of ice cream, hard and soft credit inquiries are not quite as delicious. However, you can sometimes choose how many scoops of each type of inquiry you would like. In other words, you have more power than you may realize over your financial diet. Although there might be some confusion over the difference between hard and soft credit inquiries, it’s helpful to know the difference between the two, when both are performed on your credit scores and how to avoid unnecessary inquiries that can hurt your scores.

What a credit inquiry means for you

A credit inquiry is when you or an external person checks your credit report. This happens when you want to know your credit scores or when a lender needs to read over your reports to ensure you are financially responsible enough to pay back your future debts. A credit inquiry matters because it can affect your credit scores — depending on the type. Someone can either make a hard inquiry or a soft inquiry on your credit.

By law, the Fair Credit Reporting Act allows you to restrict who can do a soft inquiry. Also, it demands that you give consent before anyone can perform a hard inquiry. Furthermore, a consumer reporting agency can give your information only to parties that demonstrate a valid need.

What is a hard credit inquiry?

A hard inquiry is also called a “hard pull.” This type of inquiry happens when a lender needs to check your credit reports for a major loan like an auto loan, house loan, new credit card application, student loan application or occasionally, a leasing application. A hard pull stays on your credit reports for two years and can lower your scores slightly. There are lots of different credit scores out there, but FICO and VantageScore are the two most popular. Depending on which credit score the lender is using, a hard inquiry can decrease it by five to 10 points per pull.

If you’re shopping around for the best rates for a loan, the multiple hard inquiries can be lumped together by the credit bureaus if made within two weeks of each other — or sometimes more, depending on which score is being used. Before a hard pull can take place, you have to consent to the inquiry by signing a credit report authorization form. If a hard inquiry happens without your consent, file a dispute with your credit bureau right away.

What is a soft credit inquiry?

A soft inquiry is also known as a “soft pull” and can happen without your knowledge or consent. When you receive a pre-approved offer in the mail or via email for a credit card or other financial product, that company performed a soft pull on your credit. Luckily, a soft inquiry doesn’t affect your credit scores. A soft pull also happens when you check your own credit or when someone conducts a background check on you. You’re the only one who can see soft inquiries on your credit reports, so potential lenders won’t know how many soft pulls you have had.

Key differences between the two

There are several differences between a hard and a soft credit inquiry, but there are two main distinctions. First, a hard inquiry can lower your credit score while a soft pull does not. Each time you apply for a loan or a new credit card, it counts as a hard pull on your credit and can lower your score by five to 10 points each time.

Even though it may be tempting, it’s best to think twice before applying to multiple credit card offers at one time. However, if you’re shopping around multiple lenders, most lenders will allow you to check your interest rate offers with a simple soft credit check. Be sure to read the fine print of an interest rate check to find out if the lender will do a soft or hard credit pull on your scores.

If you’re shopping interest rates with lenders and they require a hard credit pull to check your rate, the credit bureaus will typically categorize these as a single hard pull. Therefore, you’ll only get between five and 10 points taken off even if you apply for six different loans within a certain time span. That period depends on which credit score you’re looking at, but if you complete each application within a two-week span, you should be good to go for both FICO and VantageScore.

The other major difference between a hard and a soft inquiry has to do with consent. Before a hard pull can happen, you must approve it. You have to sign off for the lender or credit card issuer to make a hard inquiry on your report. Meanwhile, you will likely remain unaware that a soft pull has taken place, and you don’t have to approve it beforehand. When you check your credit score, that’s counted as a soft pull, and any pre-screened offers are also soft pulls. None of these require your approval ahead of time.

What to do prior to an inquiry

Any time a bank, credit card issuer or any other lender requires a credit pull of any kind, find out if it’s a hard or soft credit inquiry. Read the fine print online or call a customer service representative to answer your questions. . That way, you’re aware before you put in the application or proceed to the next step of the process. If you already have several separate hard pulls on your record at that time, you may want to hold off on whatever you’re doing for a few months. Otherwise, you risk lowering your credit scores to a lower tier, and lenders may start to consider you a high-risk customer.

As mentioned, you will probably not know a soft inquiry is happening, but if you want to reduce the number of times it occurs, you have options. Under the Fair Credit Reporting Act, you can opt-out through the nationwide credit bureaus by calling 1-888-5-OPTOUT (1-888-567-8688). Also, you can call the toll-free number included on any of the offers you receive and ask to be removed from the pre-screened list.

Even though hard and soft credit inquiries aren’t as exciting as selecting flavors of ice cream, it’s best to understand the difference between a hard and soft credit inquiry so you know how to manage your credit. Since you now know to watch out for too many hard pulls at one time, you won’t be susceptible to lowering your credit ranking unawares. And because you understand that you have the power to limit the number of pre-approved offers you receive in the mail, you can lower the number of soft pulls on your report. Just like you refine your food diet to work for your lifestyle, you can apply the same healthy approach to your financial life.