Difference Between Hard Credit Check and Soft Credit Check

Before checking your credit report, understand the difference between a soft credit check and a hard credit check.

Soft and hard investigations

A credit check happens when someone (even you) looks up your credit. When you formally apply for credit, a lender may do a hard check, which can cause a slight drop in your credit score. However, a soft check is done at pre-approval or when you check your credit report yourself—something you should do regularly to prevent errors or identity theft . 2 A soft check does not affect your credit score. But here are the differences between a hard check and a soft check:

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This only happens when you formally apply for some form of credit, whether you’re borrowing money or starting a new power company.1 A hard pull will usually cause a small, temporary bump in your credit score.1,3 For American Express Personal Card applications, a hard pull only occurs after you’ve been approved and accepted for the credit card, not during the application process itself.

Gentle Inquiry

This happens when you check your own credit report or when a business checks your credit report without you applying for credit . 1 A soft inquiry does not affect your credit score . 1

Knowing the difference between a soft and hard credit check can help you avoid an unnecessary drop in your credit score.

What is a hard credit check?

Besides applying for a loan or a new credit card, there are other financial actions that can trigger a strict credit check. When you apply to rent an apartment, a landlord or hiring manager may play hardball with you.4 The same is true when you sign up for a cell phone plan.5 Even leasing a car can trigger a strict credit check if you pay with a debit card instead of a credit card.6

Each hard inquiry stays on your credit report for two years, but when FICO calculates your credit score, it only considers credit inquiries from the past 12 months . 4 Even in the first year, the impact is usually around 5 to 10 points, depending on your credit history . 7,8 Compared to other financial moves that can result in a significant drop in your credit, this is a small thing.

A hard inquiry affects your credit score because you are applying for credit in some form. A hard inquiry is also the starting point for businesses to check your credit. If they see multiple hard inquiries over a period of weeks or months, it can be a red flag that you may be overdrawn .

The application process at American Express means you can apply for a US personal credit card with confidence, as submitting your application will not affect your credit file. A hard check will only be conducted once you have been approved and formally accepted for the card. However, if you apply for an American Express business card, a hard credit check will be conducted regardless of the outcome of your application.

Minimize the impact of strict credit checks

When shopping around for a loan, there is a way to reduce the impact of hard pulls on your credit score. The two main credit scoring models, FICO and VantageScore, won’t penalize you for being a smart comparison shopper, as long as you apply for the same type of credit from several different lenders within a relatively short period of time .

Let’s say you are shopping for a car loan. You will have a period of time during which all hard inquiries related to similar loans will be aggregated and counted as one hard inquiry. This purchase window varies from 14 to 45 days, depending on the version of the credit scoring model used . 3.9 A safe approach is to try to submit all loan applications within two weeks.

Did you know? American Express has updated its application process to make it more transparent. Now you can see if you’ve been approved for an American Express Personal Card without it affecting your credit score. If you’re approved and choose to accept the card, the information American Express provides to the credit bureaus may affect your credit score. Learn more.

What is a soft credit check?

If you or a business simply wants to check your credit report without making a formal request for funds or credit, it is considered a soft credit inquiry.1 You can think of soft credit inquiries as insignificant events because they do not affect your credit score.1 Here are some examples of soft credit inquiries:

• Unsolicited offers: The pre-approval offers many people receive when applying for a new credit card, car lease, or mortgage refinance are often the result of a soft pull by a business looking for the right candidate. 1 But if you decide to actually apply for a pre-approved deal, you are now formally asking for money or credit — which will result in tough scrutiny. 10
• Existing credit relationship: Once you’ve obtained a loan or opened an account with a business, they may check your credit report from time to time to make sure everything is in order.1 This counts as a soft pull.

Check for identity theft or other fraud

It may be wise to check your credit report regularly for suspicious hard inquiries that you did not authorize.2 This could be a hint that an identity thief may be impersonating you and applying for a loan or credit using your personal information. If you find that you did not remember requesting a hard inquiry, you will need to take steps to alert the credit bureaus, consider freezing your credit, closing any unauthorized accounts you discovered, and then filing a dispute to resolve the issue so that the unauthorized hard inquiry disappears from your credit report.2

The main difference between a hard and soft credit inquiry is whether or not you’re formally applying for credit and how that affects your credit score. Only hard credit inquiries will hurt your credit score. But even then, a hard inquiry usually only results in a small, temporary drop in your credit score.

• “What is a Credit Inquiry?” Consumer Financial Protection Bureau
• “Check your credit report at least once a year,” Consumer Financial Protection Bureau
• “What is a hardship inquiry and how does it affect your credit?” Experian
• “What is the difference between hard and soft research?” Experian
• “Why buying a cell phone may depend on your credit,” TransUnion
• “Can I build credit by leasing a car?” Experian
• “What inquiries are on your credit report?” Experian
• “Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?” MyFICO
• “Understanding Hard Inquiries on Your Credit Report,” Equifax
• “Will Getting Pre-Approved Affect Your Credit?” Experian

Carla Fried is a freelance writer who has focused on personal finance throughout her career. Her work has appeared in The New York Times, Money, CNBC.com, and Consumer Reports, among many other publications.

All Credit Intel content is written by freelance writers and is commissioned and paid for by American Express.