Hard Inquiry vs Soft Inquiry: What's the Difference?

Highlights:

• Hard inquiries can impact credit scores and remain on your credit reports for up to two years.
• Soft inquiries do not affect your credit scores, but can show up on your credit reports.
• If you have a security freeze in place, you will need to lift it if you are applying for a new loan or line of credit.

Maintaining good credit is one of the best things you can do for your finances. With good credit scores, you may qualify for lower interest rates or higher credit limits. Good credit could also make it easier to get approved for loans and credit cards.

Many factors affect your credit scores, like payment history and how much debt you have. Inquiries, especially hard inquiries, can also impact your credit scores. But what is the difference between hard inquiries and soft inquiries? And, which credit inquiry should you pay more attention to? Equifax^® delves into the difference between a hard inquiry and a soft inquiry. We look at how they affect your credit scores and how to reduce the impacts of inquiries.

What Is a Hard Inquiry?

When applying for a new loan or line of credit, you will see a hard inquiry on your credit report. A hard inquiry occurs when a lender views your credit report after you apply. Some examples of when a hard inquiry might occur are when you apply for a mortgage, auto loan or personal loan. Lenders perform credit checks to see if you are reliable with paying back what you borrow.

A hard inquiry stays on your credit report for up to 2 years. But it usually stops affecting your credit scores after 1 year. Unfortunately, you can't remove legitimate hard inquiries from your credit reports. But, if you notice an unauthorized hard inquiry on one of your credit reports, take action. You should contact the company associated with the unauthorized hard inquiry.

If you have a security freeze in place, you will need to lift it if you are applying for a new loan or line of credit. If the security freeze is still in place, the lender could deny your application. A security freeze is one step you can take to help prevent access to your Equifax credit report with certain exceptions.

What Is a Soft Inquiry?

A soft inquiry appears when someone views your credit report for promotional purposes. It is important to note that soft inquiries have no impact on your credit scores. But, much like hard inquiries, they remain on your credit reports for 1 to 2 years.

Credit card companies perform soft inquiries all the time. They do this when increasing your credit limit or giving you a promotional interest rate. Insurance companies, landlords and employers also use soft inquiries in their screening processes. If you've been shopping for car insurance or interviewing for a job, you may see a soft inquiry. A soft inquiry may even appear on one of your credit reports after you check your own credit.

Hard Inquiry vs. Soft Inquiry: What to Know

Other than their name, there are some big differences between a hard inquiry vs. soft inquiry. Listed below are the main differences between the two:

• Soft inquiries don't impact your credit scores, while hard inquiries do.
• Hard inquiries only appear on your reports after you apply for new credit. Soft inquiries appear any time a company reviews your credit.
• If you have a security freeze in place, you'll have to lift it if you want a hard inquiry to go through.
• Hard inquiries and soft inquiries both stay on your credit reports for up to 2 years. But, only hard inquiries can make an impact.

Tracking Your Credit With Equifax

It is important to check your credit reports often. Credit monitoring can help you keep track of the hard and soft inquiries on your credit reports. If you notice an unauthorized hard inquiry that is a result of fraud, you can file a dispute on your Equifax credit report.