A hard credit pull occurs when a lender wants to take a look at your credit score. Credit inquiries come as either a hard credit pull or a soft pull, and they don’t have the same effect on your credit score. So, it’s essential to understand the difference and when each one occurs.
Know The Difference: Soft vs. Hard Credit Pulls
Soft credit pulls happen all the time and include any check on your credit score that isn’t initiated by a lender when you’ve completed a credit application. Soft pulls do not affect your credit score.
A hard credit pull occurs only after you’ve completed a credit application. The lender makes a hard inquiry to establish your risk and decide if they will approve or deny your loan. These hard credit pulls have a significant impact on your credit score.
The crucial differentiator is your completed application for credit. Unless you’re directly applying for credit, a hard credit pull should not occur.
Today, several online resources exist to let you get an idea of your loan rates and credit approval odds without performing a hard credit pull. These are a great place to start when you’re considering applying.
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How does a hard credit pull affect your credit score?
Credit inquiries, like a hard credit pull, are just one of the factors that determine your credit score. Hard inquiries are unavoidable, but thankfully their impact on your score is short-term and can be minimized as long as you understand how they work.
When determining your credit score, reporting agencies look at the number and frequency of hard credit pulls on your account. Having too many hard credit pulls in quick succession signals to the agency that you might be chasing credit, posing a risk for lenders and lowering your credit score.
The key to avoiding significant damage to your credit score too much is to space out loan and credit applications as much as possible.
Understanding the timeline of how hard credit inquiries show up on your credit report can help you make sure you’re making new applications at the right time. Here’s how it works:
- Within 90 days, your credit score will start to recover from a single hard inquiry
- After 12 months, a hard inquiry will no longer affect your score
- After two years, hard inquiries are no longer reported in your credit history
Can you remove a hard credit pull from your credit report?
If a hard credit pull is performed by an entity you authorized, you can’t have their inquiry removed from your credit report, and it will continue to affect your score.
However, if you notice a hard credit pull reported on your credit history that you did not authorize, you can dispute the inquiry while reviewing your credit report. This is just one of the many reasons it’s a good day to check your credit report regularly to keep your credit in good standing.
Hard credit pulls are inevitable and should be welcome, as they let you know who’s accessing your credit information and why. Understanding how they work and when they occur will allow you to continue building great credit and keep your info safe!
