Soft vs. Hard Credit Checks: What’s the Real Difference?

If you’re managing your credit, you’ve likely come across soft and hard credit checks. You might wonder, what’s the real difference between the two? Why does it matter which type of credit inquiry is performed on your credit report? Understanding the soft vs. hard credit checks is essential for maintaining your credit health and making informed financial decisions. Whether you’re applying for a new credit card, checking your credit score, or getting pre-approved for a loan, knowing what kind of credit check is being performed—and how it affects your credit—can save you from surprises and help you protect your score.

In this comprehensive guide, we’ll break down everything you need to know about soft and hard credit checks, including how they work, when they’re used, how they impact your credit score and actionable tips for managing credit inquiries. We’ll also highlight how Beem’s credit monitoring tools can help you track and understand your credit checks so you stay in control of your financial health.

What Is a Credit Check or Credit Inquiry?

A credit check, also known as a credit inquiry, occurs when a person or company reviews your credit report to evaluate your creditworthiness. This inquiry involves requesting information about your credit history from one or more major credit bureaus: Experian, Equifax, or TransUnion.

Credit checks are a standard part of many financial processes. They’re often used when you apply for:

• Credit cards
• Personal loans
• Mortgages
• Auto loans
• Renting apartments
• Utility accounts
• Some job applications

Each credit check is recorded on your credit report, and depending on the type, it may impact your credit score differently.

Read related blog: How Credit Scores Are Calculated: Behind the Numbers

The Two Main Types of Credit Checks: Soft vs. Hard

Credit inquiries fall into two categories: soft inquiries and hard inquiries.

Soft Credit Checks (Soft Inquiries)

Soft inquiries occur when your credit report is checked but not to lend new credit. These checks are generally for informational or background purposes and do not affect your credit score.

Common examples of soft inquiries include:

1. When you check your credit score or credit report, for example, using Beem to view your score, that’s a soft inquiry.
2. When companies perform background checks for employment screening (with your permission).
3. When credit card companies or lenders pre-approve you for credit offers based on your existing credit information.
4. When your current credit card issuer reviews your account to decide on credit limit increases or promotional offers.

Soft inquiries can happen without your explicit permission in some cases and are only visible to you on your credit report, not to potential lenders.

Hard Credit Checks (Hard Inquiries)

Hard inquiries happen when a lender or creditor requests your credit report as part of a formal application for new credit. Because these checks signal that you’re actively seeking credit, they can temporarily affect your credit score.

Hard inquiries typically occur when:

• You apply for a new credit card
• You apply for a mortgage, auto, personal, or student loan.
• You apply for a new line of credit.
• In some cases, when requesting a credit limit increase (if the issuer conducts a hard pull)

Hard inquiries are visible to other lenders and remain on your credit report for up to two years, though their impact on your score fades much sooner.

How Do Soft Credit Checks Work?

Soft inquiries are often called ‘soft pulls’ because they do not affect your credit score. It’s a soft inquiry when you check your credit report or score. This is why financial experts recommend regularly checking your credit on your own—it’s a safe way to monitor your financial health without any risk.

Similarly, lenders use soft inquiries to pre-qualify or pre-approve you for credit offers. These offers don’t require a hard pull because you haven’t formally applied yet. They want to see if you meet the basic criteria to receive an invitation.

Employers conducting background checks might also perform soft inquiries to assess your financial responsibility, typically with your permission. Soft inquiries are visible only to you on your credit report, not to lenders.

Because they don’t affect your score, soft inquiries encourage consumers to stay informed about their credit without fear.

Read related blog: 10 Best Cash Advance Apps No Credit Check

How Do Hard Credit Checks Work?

Hard inquiries signal that you have actively applied for new credit. Lenders use hard pulls to assess your creditworthiness before approving or denying your application. This inquiry provides a complete view of your credit report, including detailed history and balances.

Because hard inquiries suggest you may be increasing your debt, they are treated as a risk factor by credit scoring models. That’s why hard inquiries can slightly lower your credit score.

How Much Does a Hard Inquiry Affect Your Credit Score?

The impact of a hard inquiry on your credit score varies depending on your overall credit profile.

• For many people, a hard inquiry lowers the credit score by about 5 to 10 points.
• The impact might be greater for those with minimal credit history because each inquiry weighs more heavily.
• The effect is typically temporary and usually fades after about 12 months.
• Hard inquiries remain visible on your credit report for up to two years but have little or no impact after the first year.

It’s important to note that while a hard inquiry can lower your score slightly, the impact is generally much less significant than a missed payment or high credit utilization.

Why Multiple Hard Inquiries Can Hurt Your Credit

Applying for multiple credit accounts in a short period can be seen by lenders as a sign of financial distress. If you have several hard inquiries within a few months for unrelated types of credit, your score may drop more than for a single inquiry.

However, credit scoring models recognize that consumers often shop around for the best rates on certain loans, like mortgages, auto loans, or student loans. For this reason, multiple inquiries for the same type of loan within a 14 to 45-day window are usually treated as a single inquiry to minimize the impact.

This ‘rate shopping’ window allows consumers to compare offers without unduly damaging their credit score.

Read related blog: How to Improve Credit Utilization to Boost Your Credit Score Fast

When Do Hard Inquiries Occur?

Hard inquiries happen when you officially apply for credit products, such as:

• New credit cards
• Mortgages or home equity loans
• Auto loans
• Personal loans
• Lines of credit
• Some insurance policies (depending on insurer and state)

Some credit card issuers also perform hard inquiries when you request a credit limit increase, but others only do a soft pull. It’s always good to ask your lender what inquiry will be performed before applying or requesting changes.

When Do Soft Inquiries Occur?

Soft inquiries occur in less formal credit assessments and include:

• Checking your credit score or report
• Pre-approved credit card or loan offers
• Account reviews by your existing creditors
• Employment background checks (with your consent)

Soft inquiries happen frequently and do not require explicit permission in all cases.

How Can You Avoid Hard Inquiries?

While hard inquiries are necessary when applying for new credit, you can take steps to minimize their impact:

• Only apply for credit when you truly need it.
• Limit the number of applications in a short time.
• When shopping for mortgage or auto loans, do your rate shopping within the designated window (usually 14–45 days).
• Use Beem to monitor your credit inquiries and get notified of any hard pulls immediately.

Read related blog: Instant Cash Advance for DoorDash Drivers No Credit Check

How Beem Helps You Manage Credit Inquiries

The platform offers tools designed to give you complete transparency and control over your credit inquiries:

• Real-time alerts: Get notified instantly when a hard or soft inquiry appears on your credit report.
• Detailed inquiry tracking: View when and who requested your credit, the type of inquiry, and its potential impact.
• Score Simulator: Model the impact of applying for new credit before moving.
• Credit monitoring: Monitor your overall credit health to know when to apply and when to hold back.

With Beem, you never have to guess if an inquiry has affected your score or worry about unexpected pulls.

Common Myths and Misconceptions About Credit Inquiries

• Myth: Checking your credit lowers your score.
• Fact: Checking your credit report or score triggers a soft inquiry and does not impact your credit score.
• Myth: All credit checks are the same.
• Fact: Only hard inquiries affect your credit score; the effect is usually minor and temporary.
• Myth: Multiple hard inquiries always tank your credit.
• Fact: Multiple hard inquiries for the same loan type within a short window are usually counted as one, reducing negative impact.

Practical Tips for Managing Credit Checks

When applying for credit or monitoring your score, keep these tips in mind:

• Ask lenders upfront whether a credit check will be hard or soft.
• Limit new credit applications to avoid unnecessary hard inquiries.
• Shop for loans efficiently within the designated window to minimize multiple inquiries.
• Use Beem regularly to monitor your credit score and inquiries proactively.

FAQs: Soft vs. Hard Credit Checks

Understanding Credit Checks Protects Your Credit

Credit inquiries are essential to your credit history, but not all are equal. Knowing the difference between soft and hard credit checks helps you protect your credit score and make smarter financial choices.

With Beem’s comprehensive monitoring, alerts, and educational tools, you can confidently manage credit inquiries, avoid unnecessary score damage, and keep your credit on the right track. Download the app now.