Hard vs Soft... Which Affects Your Credit Score?

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Hard vs Soft... Which Affects Your Credit Score?

There are two kinds of inquiries to your credit report,  a hard inquiry and a soft inquiry. Both types allow a third party to
gain access and view your credit report, but only one can affect your credit report score. Learn more about hard hits
and soft hits.

A hard inquiry, also referred to as a hard hit, takes place when financial institutions such as credit card issuers or
lenders check your credit report prior to a lending decision or credit approval. Hard hits often happen during credit card,
loan or mortgage applications. These third parties must be given authorization prior to this kind of inquiry.

How Hard Hits Affect Your Score
Hard inquiries lower your credit report score by 2 points and may stay on your credit report for 2 years. Two points may
not sound much for some, but if you are one of those who has lots of inquiries, short credit history or few accounts,
making another hard inquiry may already sound like a big deal.

If you see a hard hit that you did not approve, you can send a letter or call the creditor to inform them the pull wasn't
authorized and that it should be removed. In line with that, any erroneous information can also be disputed directly to
credit bureaus.

Avoiding Hard Hits
Can hard hits be avoided? It depends on what the inquiry is and for what reason.  If you are applying for a loan or a new
credit card, then you can't avoid the hard inquiry.
Limit hard inquiries as much as possible; numerous hard pulls on your credit report may mean you are desperate for
credit, or that you're not qualified for whatever credit you desire.

A soft inquiry, also referred to as a soft hit, takes place when individuals or companies view your credit report for
background checks such as employers and for assessing whether you can be pre-approved for credit card offers.

If you've received a credit card offer through mail, chances are the company did a soft pull to see if you will be qualified.
Employers usually prefer hiring someone with good credit so they may do a soft inquiry, because it indicates how
responsible an individual is, at least financially.

How Soft Hits Affect Your Score
Because these individuals do not have to arrive at a lending decision, or to obtain approvals, soft inquiries are just seen
as promotional, and don't have as much impact. They can happen without your consent or approval, but you don't have
to worry because they will not have a negative effect on your score. Soft hits also take place whenever you pull your
credit report to see your credit report score. These inquiries may or may not be noted on your credit report; It will all
depend on the credit agency.

Whenever creditors need information about your credit history, they can either make a soft or hard inquiry on your
credit report. Only hard inquiries can affect your score, but don't worry too much; the effects will hopefully only be minor.

If there are no excessive inquiries and you're applying for credit you're highly qualified for, you will likely get the credit
you need without negatively affecting your credit score.