What is a hard inquiry?

When you’re looking to borrow money to buy a home, car, or another large expense, you’ll apply for a loan to get the money you need. During the process, lenders will check your credit score, which is called making an inquiry on your credit report. These can be either soft or hard inquiries. Soft inquiries, also referred to as a soft pull, are credit checks that are typically used for prequalification and will not affect your credit score. A hard inquiry, also referred to as a hard pull, is a more thorough review of your credit. Hard pulls are reported to credit bureaus and have the potential to temporarily ding your score by a few points.

Here’s what we’re going to cover:

• What is a hard credit check on your credit report?
• How can hard inquiries impact your credit score?
• How long does a hard inquiry stay on your credit report?
• Hard inquiry vs. soft inquiry
• Can you dispute a hard credit inquiry?
• Oportun: Affordable lending options designed with you in mind

What is a hard credit check on your credit report?

A hard inquiry, or hard credit check, on your credit report is an official check from a lender that indicates that you’ve formally applied for a line of credit or loan. The lender will review the information in your credit profile to understand your creditworthiness and how well you’ve been able to manage credit in the past. The lender will use the information from your credit report and your credit score as part of their evaluation of your application.

How can hard credit inquiries impact your credit score?

A hard credit check can have a slight negative impact on your credit score, especially if you submit applications for a lot of credit all at once. However, a single hard pull when you apply for a new credit card may not even noticeably impact your score.

Applying for a lot of credit at once could signal to lenders that you’re a risky borrower or that you’re trying to take on too much debt at the same time. If you’re rate shopping for a car or mortgage over the span of a few weeks, credit bureaus may count the checks as a single inquiry. Keep in mind this favorable take on rate shopping for a vehicle or home won’t apply to other types of credit applications, like credit cards, which will be counted as independent hard credit pulls.

If you plan to apply for multiple types of credit unrelated to a home or car, you can consider spacing them out over a period of months. You can also check if the lenders offer a prequalification option that indicates whether you’ll be approved without running a hard pull.

How long does a hard inquiry stay on your credit report?

A hard credit inquiry will typically remain on your credit report for two years, but it generally doesn’t impact your score after one year. Since it may only decrease your score by a few points, you can typically combat the dip with responsible credit best practices like paying your debts in a timely manner and keeping your credit utilization low.

Hard inquiry vs. soft inquiry

There are several differences between soft and hard credit inquiries to be aware of. A hard inquiry may occur when you apply for a mortgage, personal loan, auto loan, credit card, student loan, or apartment rental or request a credit limit increase on your existing credit card. You must authorize the lender to check your credit when you submit the application.

A soft inquiry is a less thorough review of your credit report than a hard inquiry. Soft inquiries may be used during a credit check by an employer, or when you check your own credit score, or when you check to see if you’re prequalified for a credit card or other loan.

If you’re concerned about the impact of a hard pull, you can always check with your lender before you prequalify or apply for credit to understand which type of inquiry they’re submitting.

Can you dispute a hard credit inquiry?

If you’re reviewing your credit report and notice an inquiry that was done in error without your approval, you can dispute it with the lender and the credit bureau. Any hard credit check indicates an acknowledgment that you’ve applied for credit, so any checks you didn’t authorize could also be a sign of identity theft that you’ll want to look into right away.

Oportun: Affordable lending options designed with you in mind

Now that you understand how hard inquiries work, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options. Visit our homepage to learn about:

• Personal loans
• Secured personal loans
• Savings
• And more!

Sources:

Equifax. Understanding Hard Inquiries on Your Credit Report