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Hard Credit Pull vs. Soft Credit Pull

Written by Marc Guberti

Marc Guberti is a Certified Personal Finance Counselor who has been a finance freelance writer for five years. He has covered personal finance, investing, banking, credit cards, business financing, and other topics.
Marc’s work has appeared in US News & World Report, USA Today, Investor Place, and other publications. He graduated from Fordham University with a finance degree and resides in Scarsdale, New York.
When he’s not writing, Marc enjoys spending time with the family and watching movies with them (mostly from the 1930s and 40s). Marc is an avid runner who aims to run over 100 marathons in his lifetime.

Updated October 19, 2023​

4 min. read​

hard vs soft credit check

Your credit score tells lenders and other groups how well you can manage debt. Banks won’t take your word about your credit, so they will run credit checks to access details on your report. Any lender can either do a hard credit pull or a soft credit pull. Each credit inquiry provides access to different information, but only one of these pulls hurts your credit score. We will cover the differences between these credit pulls and important details to know.

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What is a Credit Check or Pull?

During a credit check, a financial institution requests access to your credit report. While this practice is common anytime you apply for a loan or line of credit, other people will ask for this information. For example, landlords, utility companies, and some employers conduct credit pulls to learn more about your financial history.

Hard Credit vs. Soft Credit Check

Credit checks reveal your credit score, but a hard credit check reveals additional information. A hard credit check lets lenders access your credit report, while a soft credit check only provides basic details. Banks usually conduct hard credit checks for loans. Soft pulls usually take place with lower-level commitments. You can find small business loans that don’t require hard credit checks, but most other lenders will ask about your credit before giving you a loan, complicating the process for low-credit business owners.

What is a Soft Credit Check or Pull?

A soft credit check lets someone access your credit score and other basic information. This credit check will not impact your credit score, and some companies can check your score without your approval. In addition, soft credit checks enable lenders to access information on you quicker without hurting your credit score.

What is a Hard Credit Check or Pull?

A hard credit check is a more detailed request. Financial institutions get your credit report and can review a more comprehensive history of your debt management. A hard credit inquiry will negatively impact your credit score. Most people only lose a few points, and it’s easy to recover from a hard credit check. However, some people apply for too many loans, lines of credit, and other financial products without letting enough time pass. These people can trigger several hard inquiries, which can have a more notable impact on your credit score.

Applying for one loan is okay, but applying for 10 financial products over several months can drag your score. If you apply for several loans over 2-4 weeks, it counts as a single hard inquiry. This rule helps borrowers who apply for several small business loans within a few days to find the best rates. You must give a financial institution or another entity permission to conduct a hard inquiry. These inquiries can remain on your credit score for up to two years.

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What is the Difference Between a Hard vs. Soft Credit Check

Hard credit checks can make it more difficult to qualify for loans in the future. Each hard credit pull will decrease your credit score by a few points regardless of whether you get approved for a loan or not. Soft credit checks do not hurt your credit score, and lenders obtain less information during these credit checks. Some lenders and entities can do a soft pull on your credit without asking for permission. On the other hand, a lender or other entity can only initiate a hard inquiry on your credit with your consent.

How Does a Soft Credit Check Affect Your Credit?

A soft credit check will not affect your credit. Most of these soft credit pulls have nothing to do with credit and obtaining loans. You can still get a working capital loan or other financial product with a soft credit check, but you will have to extend your search to online lenders. Traditional financial institutions do not conduct soft credit checks for their loans.

How Does a Hard Credit Check Affect Your Credit?

A hard credit check will reduce your credit score by 5-10 points. This decrease takes a few months to recover from, but it’s manageable. Hard credit checks do not do much to your score on their own, but they become burdensome when they add up. Applying for too many loans over several months can drag your credit score and make it more challenging to qualify for loans.

Borrowers should also consider how a lower credit score will impact their rates. Consumers with lower credit scores get higher interest rates which make loans more challenging to manage. You have to give a bank or entity permission to conduct a hard credit check, so you have more control over this element of your score.

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An Example of a Soft Check

Some people believe the way someone manages their finances is an indicator of how they handle other responsibilities. Employers who believe this concept often ask applicants about their credit. When you apply for a job, some employers will conduct a soft credit check. This soft credit check gives employers a brief snapshot of how you navigate financial obligations and deadlines. Employers may also get concerned if you have a lot of debt. Some may view high debt as an increased risk of theft.

While some entities can run a soft credit pull without asking you, employers must ask before running this credit check. Each state has different rules on this process, and some have made it illegal for employers to run soft credit pulls on applicants’ credit.

An Example of a Hard Check

Many people aspire to become homeowners. Many people view homeownership as part of the American Dream, but most people do not have enough money to buy a home. As a result, home buyers often use mortgages to finance their property purchases.

Mortgages are the highest loan amounts most people take out in their lifetimes. Lenders want to assess a borrower’s risk using more detailed metrics and credit history. A bank will conduct a hard credit check before giving the borrower a mortgage. This hard credit check makes the bank feel more confident in providing the aspiring homeowner a loan, but it will reduce your score by a few points. You will lose points on your score even if your mortgage application gets rejected since the bank used the hard inquiry to make its decision.

Get a Business Loan Offer Without a Hard Credit Check

A hard credit check will hurt your score. This credit check can also make it harder to get a business loan if you have bad credit. Some lenders will see bad credit as a dealbreaker and reject your application. However, there is hope for small business owners who need capital and have low credit.

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