Know the difference between hard vs soft credit enquiries

Know the difference between hard vs soft credit enquiries

You’ve worked hard to get that essential three digit number known as your credit score to where you want it Click Here and now you want to keep it that way. And since you understand how your credit score is calculated Click Here you know that credit inquiries ( aka Credit Pulls ) are one factor in determining it.

What exactly counts as a credit enquiry? What are the different types? When can you expect each one to occur? Keep reading to find the answers to these important questions.

Hard vs Soft Credit Inquiries

Two kinds of inquiries can occur on your credit report, hard inquiries and soft inquiries. While both types enable a third party ( i.e. your lender or employer) to view your credit report, only hard enquiries can negatively affect your credit score.

A hard credit enquiry occurs when a lender checks your credit report to make a lending decision. Hard pulls can slightly lower your credit score and typically stay on your credit report for five years.

Hard pull credit enquiries involve an official check of your credit report. When you apply for a car loan, personal loan or home loan and allow a lender to check your credit file, the lender will conduct a hard pull. While soft pull enquiries have zero effect, hard pull checks are listed on your credit file and therefore can affect your credit score.

Every hard pull credit check is listed on your credit report, including which lenders have denied previous applications and how many times you’ve applied for loans in the past. Too many hard pull enquiries in a short space of time can negatively impact your credit score.

You have to give the lender permission to conduct a hard pull enquiry. Before submitting a loan application, make sure that your finance application meets all the criteria and has a good chance of being approved. While a hard pull will reflect on your credit report either way, carefully considering your loan options can help avoid adding rejected applications to the list by speaking to an eFinance Home Loans Finance Broker today.

A soft credit inquiry occurs when a person or company checks your credit report, like when you check your credit score – which you can do for free via online. CLICK HERE

Note : If is not recommended to shop the deal around as this does impact your credit score if you are using a lender which uses credit scoring as part of there computer generated decision process. It is highly recommended to speak with an eFinance Home Loans Finance Broker to avoid any issues with multiple credit enquiries. eFinance Home Loans uses the latest technology in multiple lender software to identify the best rate WITHOUT the need to submit multiple finance applications

 

Guide to hard vs soft credit enquiries

This chart , based on eFinance Home Loans practises, can help you figure out what type of inquiry will be placed on your report :

Hard Credit Enquiry Soft Credit Enquiry
Applying for a credit card Background check by an employer
Applying for a mortgage Checking your own credit score
Applying for an auto loan Opening a bank account
Applying for a personal loan
Applying for a credit limit increase
on your credit card account

Every hard pull credit check is listed on your credit report, including which lenders have denied previous applications and how many times you’ve applied for loans in the past. Too many hard pull enquiries in a short space of time can negatively impact your credit score.

Limiting the damage

  • Keep an eye on your credit file. You can request a copy of your credit report for free, once a year – to get an accurate idea of your financial status. This counts as a soft pull check, so it won’t impact your credit score. CLICK HERE
  • Check the lending criteria. Since every hard pull is listed on your credit profile, check that your objectives meets the lending criteria before submitting an application. Only apply for loans that you have a good chance of securing.
  • Limit your credit applications. Be selective about where you apply and how many applications you submit. Multiple applications to different lenders shows desperation and irresponsibility, neither of which inspires lenders’ faith. This is why an eFinance Home Loans Finance Broker can assist you to make the RIGHT decision as to the lender. CLICK HERE