Credit Inquiries: Hard, Soft and No In-Between

Written by Posted On Thursday, 07 October 2021 00:00

When you get a copy of your credit report, you’ll see much more than just the credit accounts you have or have had. You can see your mortgage history, for example. You’ll see the original balance, the current balance, how old or new the mortgage is and what the monthly payments are. Next, you’ll see your payment history which will show any payments made more than 30, 60 and 90 days past the due date. Other credit accounts will show similar information. But the credit report will show more than just your credit accounts. It will also show something else referred to as ‘credit inquiries.’ What’s a credit inquiry?

A credit inquiry is simply a third party looking at your credit report. There are two such types of credit inquiries. A hard and a soft inquiry. There is no third inquiry. No ‘In-Between’ type of inquiry. Credit inquiries can have an effect on your overall credit scores, but not all inquiries will.

A soft inquiry is one where various creditors are curious about offering you a new credit account. A soft inquiry would be something like a credit card company offering you the opportunity to open up a new account with them. This type of ‘pre-work’ lets credit companies send offers to those who would likely qualify for a new account. A soft credit card inquiry can be for those with all ranges of credit scores. Some cards offer their best deals to those with superior credit while other credit companies concentrate on those who need some help rebuilding credit. 

Obviously, these types of credit companies will charge higher rates and fees compared to those with sterling credit. Another type of soft inquiry will be made by certain companies who do a pre-screening for employment. Soft inquiries have no impact on credit scores but will be noted on the credit file.

A hard inquiry is one where you make a direct request for a new credit account. When you make an unsolicited request for new credit, it’s considered a hard inquiry. It’s a way for someone to build a credit history and boost credit scores. After all, credit scores rely on someone having and using credit. Someone who has zero credit accounts might find their credit scores actually fall compared to those who use credit regularly. Someone who has never used credit might not have any scores at all.

An occasional request for new credit won’t really impact credit scores one way or the other. Maybe someone applies for a credit card and an auto loan and soon thereafter for a mortgage within a reasonable period of time, say 12 months or so, scores won’t really change due to inquiries. However, multiple requests for new credit within that same period might cause creditors to think there’s some financial difficulties in the near future, such as being suddenly unemployed. Multiple hard requests for new credit will in fact cause scores to falter. But there is no ‘tweener’ when it comes to credit inquiries. Either the inquiry is hard or soft.

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David Reed

David Reed (Austin, TX) is the author of Mortgages 101, Mortgage Confidential, Your Successful Career as a Mortgage Broker , The Real Estate Investor's Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. As a Senior Loan Officer and Mortgage Executive he closed more than 2,000 mortgage loans over the course of more than 20 years in commercial and residential mortgage lending. 

He has appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show. His advice has appeared in the New York Times, Parade Magazine, Washington Post and Kiplinger's as well as in newspapers and magazines throughout the country. 

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