People avoid checking their own credit because they’ve heard “checking hurts your score.” That’s only true for one kind of check. Understanding the difference can save you from unnecessary worry — and help you shop for loans without fear.
Soft inquiries: no impact
A soft inquiry (or soft pull) happens when someone checks your credit for reasons not tied to a new credit application. Examples:
- Checking your own credit report or score
- Prequalification offers for loans or cards
- Your existing lender reviewing your account
- Some employer background checks (with your permission)
- Some insurance quotes
Soft inquiries may appear on your own copy of your credit report, but lenders don’t see them and they don’t affect your score. So check your reports as often as you like at AnnualCreditReport.com.
Hard inquiries: a small, temporary dip
A hard inquiry happens when a lender checks your credit because you’ve applied for new credit — a credit card, auto loan, mortgage, personal loan, or sometimes an apartment or utility account. You have to authorize it.
For most people, a single hard inquiry knocks off fewer than five points. FICO only counts inquiries from the past 12 months in its calculation, and they drop off your report entirely after two years. New credit as a whole makes up about 10% of a FICO Score; see what goes into a credit score.
Why lenders care about hard inquiries
Several applications in a short time can signal financial stress. A single inquiry is no big deal. Six new credit card applications in two months looks very different to an underwriter.
Rate shopping is treated differently
Scoring models know you should compare offers for big loans. For mortgages, auto loans, and student loans, multiple inquiries within a short window are generally counted as a single inquiry. Depending on the scoring model, that window ranges from 14 to 45 days. To be safe, do your loan shopping within about two weeks.
This de-duplication typically does not apply to credit cards. Each card application is its own inquiry.
Ways to minimize hard inquiries
- Prequalify first. Many lenders and card issuers offer prequalification with a soft pull. It’s not a guarantee, but it gives you a good idea. Useful when comparing personal loan APRs.
- Space out applications. Waiting six months or more between new cards is a reasonable habit.
- Ask before you agree. When requesting a credit limit increase, ask whether it’ll be a hard or soft pull. (A higher limit can help your utilization ratio.)
- Apply only when you’re likely to qualify. A denial doesn’t hurt your score more than an approval, but you take the inquiry without getting the credit.
What if you see an inquiry you don’t recognize?
An unfamiliar hard inquiry could be a sign someone applied for credit in your name. First, check whether it’s a store card or a lender’s legal name you didn’t recognize. If it’s truly not yours, dispute it with the bureau (here’s how to dispute credit report errors), report it at IdentityTheft.gov, and consider a credit freeze.
Bottom line
Checking your own credit is always safe. Applying for new credit causes a small dip that fades within a year. Shop for big loans within a tight window, prequalify when you can, and don’t let fear of a few points stop you from finding the best rate.
