Credit Inquiries: Hard Pull vs. Soft Pull
The terms “hard pull” and “soft pull” or “hard credit check” and “soft credit check” often pop up when people talk about credit report, credit history, or credit inquiries. So what exactly are they and how do they affect credit scores?
What Are Hard Pull and Soft Pull?
“Hard pull” usually refers to credit inquiries that are initiated by you. When you, for example, apply for a credit card or a mortgage or sign up a new wireless service, the lender will run a credit check to determine whether to grant you the loan and, if so, at what rate. These inquiries are usually called voluntary inquiries.
However, not every voluntary credit inquiry will be treated as “hard pull.” For example, when I applied for the FNBO account last month, only “soft pull” was conducted. “Soft pull,” also known as involuntary inquiry, happens when creditors want to send you pre-approved credit applications, or when they want to verify the accuracy of the information you provide (in the FNBO case). Also when you check your own credit history, the entry will appear as a “soft pull” as well.
How They Appear on Credit Reports
In the past year, I have obtained my credit reports from all three credit bureaus and they all report both “hard pulls” and “soft pulls”, though with slightly different terminologies.
TransUnion lists credit inquiries in two categories:
- Regularly inquiries: These are equivalent to “hard pulls” and will remain on the credit report for two years;
- Account review inquiries: These are “soft pulls” and according to TransUnion, companies use “soft pulls” for the purpose of an account review or other business transaction with you. These inquiries are not displayed to anyone but you and will not affect any creditor’s decision or any score.
Experian shows credit checks as
- Requests viewed by others: These requests are usually “hard pulls” as they are results of actions involving you, such as the completion of a credit application or the transfer of an account to a collection agency, application for insurance, mortgage or loan application, etc. Creditors may view these requests when evaluating your creditworthiness.
- Requests viewed only by you: These are “soft pulls” that are not available to creditors when they evaluate your credit.
Equifax displays inquiries in three parts:
- Inquiries in the last 12 months: These inquiries are “hard” or voluntary inquiries and were generated because you authorized the companies listed to request a copy of your credit report. Most credit scores are calculated using only inquiries from the last 12 months. Your credit score is generally not affected by several inquiries that are posted at about the same time, such as when you shop for the best auto loan or mortgage rates.
- Inquiries that do not display to companies and do not impact your credit score: These are “soft” inquiries from previous definition. These inquiries are not shown to creditors and, thus, are not considered in credit evaluation.
- Companies that requested your credit file: This section is unique to Equifax as the other two don’t have a third category. What interesting is that it’s unclear whether the information under this category will affect credit score because Equifax says lenders “may view these requests when evaluating your credit worthiness.”
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How They Affect Your Credit Scores
From the descriptions above, we can see that “soft pulls” will not affect credit scores as those inquiries are not included in the information that is available to lenders. It’s the “hard pull” that will have an impact on credit score. According to the report I received from myFICO,
FICO scores only consider the voluntary inquiries listed on your credit report from the past twelve months.
Even that, a single inquiry is not going to have any significant impact on your credit score.
According to myFICO, the way FICO is calculating the credit score shows that new credit, which is the result of your voluntary inquiry, only counts 10% of the overall credit score.
Who Performs Hard Pull
FatWallet.com has a list of financial institutions that perform “hard” credit inquiries when one applies for financial products other than a credit card or a loan. I consider this information useful when, for example, two banks offer similar products with same rates, but one does soft pull and one pulls a hard one, then I will choose the former over the latter. Also, if one plans to get a mortgage soon, then opening multiple checking/savings accounts or brokerage accounts from institutions that do conduct “hard” inquiries will affect the credit scores and, thus, the interest rates.
I edited the list (shortened it) to it only contains entries that are of general interests. Use the link above to access the complete list.
- American Express – for a One Financial account
- Ameriprise Insurance – for car insurance quote
- AT&T – for wireless phone account
- Bank of America – for checking/savings/MM/CD accounts
- Bank of New York – for checking/savings account
- Brown & Co. – for every account
- Chase Manhattan Bank – for checking account
- Cingular Wireless – for wireless phone account
- Citibank – for checking/savings/ e-Savings/CD account
- Comcast cable – for TV/high speed internet account
- Ebank – for checking account
- Everbank – for checking/money market account
- GMAC Bank – for money market account
- ING Direct – for Electric Orange checking account
- Presidential Bank – for checking account
- Schwab – for checking account
- Scottrade – hard pull on Equifax
- State Farm Auto Insurance – for auto insurance quote
- T-Mobile – for wireless phone account
- TD Ameritrade – for IRA account
- UFBDirect.com – for money market savings account
- Verizon – for phone/DSL/VoIP/wireless phone account
- Wachovia – for checking account
- Wells Fargo – for changing address or adding additional account holder on existing account
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