Are Credit Pulls Dragging Down Your Credit?

A credit inquiry—or credit pull—is a request made to a credit bureau for a copy of your credit report. There are 2 types of credit checks: soft pulls and hard pulls. The big difference between them is that hard credit inquiries may affect your credit score (such as your FICO®^{Footnote 1} Score) and soft pulls don’t. How and why this happens is easier explained when you’re familiar with each type of credit inquiry and its purpose.

Soft Inquiries

Soft credit checks can occur without you ever noticing. Don’t worry—that’s normal. When a third party wants to review your creditworthiness or payment history but isn’t doing so to decide whether they should grant you a line of credit, it’s considered a soft credit pull. Before hiring you, a potential employer will often do a soft pull as part of a background check. Credit card companies will do the same before they send out pre-qualified credit card offers.

The bottom line is that when a soft credit inquiry is made, it doesn't adversely affect your credit score.

Hard Inquiries

When you complete a credit card application or a loan application, you’re telling the lender to pull your credit report. This type of inquiry is a hard credit check. As with soft pulls, the lender receives the information on your credit report. The difference is that hard inquiries can affect your credit score. A hard credit pull shows that you’re applying for new credit, so credit scoring models usually take it into account.

Protect Your Credit Report

Understanding the way hard pulls affect your credit report can help you protect your credit score from hard falls. For instance, if you’re rate shopping for a new loan and apply to several lenders within a short period of time, those inquiries will often only be considered one hard pull and may lower your credit score slightly but not much. However, if your credit search stretches out longer than a month and a half or you credit shop every few months, your score could eventually suffer because it may appear that creditors are rejecting you. Those hard credit pulls can stay on your report for up to 2 years.

It’s not hard to keep track of what’s going on with your own credit report. The major credit bureaus TransUnion, Equifax and Experian are required to give you free credit reports and address any mistakes or evidence of identity theft. You can get your free copies at www.annualcreditreport.com.

Stay in control of your personal finances and credit history by checking your credit report at least once a year, contacting creditors listed on the report to ask questions about inquiries that aren’t familiar, and only applying for credit you need and can afford. If you’re a Navy Federal Credit Union member, you can easily monitor, manage and take control of your credit score with the free Mission: Credit Confidence® Dashboard.