Hard Pull vs. Soft Pull Credit Inquiries
What Is A Soft Pull Inquiry?
In the U.S., our credit score can dictate how much a lending organization is willing to lend us. This score is held at three large credit rating companies who keep a record of how each person is handling their credit decisions.
Someone who has made bad credit choices in the past, such as defaulting on payments or going bankrupt, is seen as a higher risk and their credit score will be lower. Someone who has always made payments on time, owns property, and has shown they have been able to handle multiple credit cards at a time will generally have a better credit rating because they appear less risky.
Seemingly innocuous activities can have an effect on your credit score. Closing a credit card can cause your credit score to drop, for example. Another thing to consider is that the credit rating companies may have errors in the information on your past. In this case, it is advised to seek the help of a credit repair company who can help you to quickly repair your credit score. We have relationships with credit repair industry leading law firms that can accomplish this. Please reach out to a sales consultant for more details.
Some companies will at some point need to check your credit score. Of course, when you apply for a house mortgage, for example, your credit score will need to be checked, but there are other times where your credit score is queried - such as for a background check. This is why there are two main types of credit check inquiry.
Soft Pull Inquiries
Also known simply as soft inquiries, soft pull inquires typically happen when someone or a company wants to query your credit score but does not necessarily want to give you credit immediately. When a lending organization pre-approves you for a loan they will normally have performed a soft pull inquiry.
The important things to note about soft pull inquiries are that they don't require your permission but they don't ever affect your credit score.
When a car dealership offers pre-approval for a bad credit auto loan, then they will be making a soft pull on your credit score. This means getting pre-approved for credit does not affect your credit score.
Hard Pull Inquires
Also known simply as hard inquiries, hard pull inquiries typically occur when a company checks your credit rating with a view to giving you credit. At this point, they're essentially putting in a formal notice that credit is being sought.
A hard inquiry is noted on your credit report and will typically stay there for two years. A hard pull inquiry will slightly lower your credit score.
Why Do Hard Pull Inquiries Affect My Credit Score?
A hard pull inquiry can lower your credit score slightly as they're showing you are actively seeking credit. This isn't much of a worry to lending organizations and as such your credit score is only lowered by a small amount. What they are looking out for is when you apply for credit from a number of places in a short period of time. This could suggest you're rather desperate for credit, raising some flags and temporarily lowering your credit score.
Protecting Your Credit Score
If you apply for a number of similar loans in a short period of time the credit rating agencies can consider this to be 'shopping around', so even multiple hard pull inquiries on bad credit auto loans within a month should not have a drastic effect on your credit score.
If you check your credit report and it contains hard inquiries you didn't authorize you can call or write to the creditor and ask them to remove them from your credit report. Credit repair companies can get these issues fixed to repair your credit score for you.
Remember, pre-approval for financing for a car through a dealership should never affect your credit score as it merely requires a soft pull credit score inquiry.