Your Credit Score: A Complete Guide to Hard and Soft Pull Credit Inquiries

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Here is the article:

The formula that generates a FICO credit score is made up of several components.  Some of these components you would expect to see, such as paying your bills on time.  But there is one component that takes a lot of people by surprise:  credit inquires.

A credit inquiry is a record of every time somebody “inquires” or gets a copy of your credit report.  This can happen, for example, when you apply for a credit card or loan.  The creditor pulls a copy of your credit file to evaluate your loan application.  Existing creditors also pull your credit report from time to time.  They do this to see if there have been any significant changes to your credit history.

Why should we care about credit inquiries?  We should care because some inquiries can lower your FICO credit score.  And this raises several questions:

  • When does an inquiry lower your credit score;
  • By how much does an inquiry lower your credit score;
  • How long do inquiries remain on your credit report;
  • How can you determine what inquiries are currently on your credit report;
  • Does shopping around for credit result in multiple, negative inquiries; and
  • Does getting a copy of your own credit file lower your score.

We’ll take a look at each of these questions.  But first let’s address a fundamental issue–why do credit inquires have any affect at all on our FICO scores?

Why Credit Inquires Matter

Imagine somebody is having financial issues.  To help pay the bills, they apply for several credit cards all in a short span of time.  While they may very well be able to pay back the debt they rack up on the cards, they do present a greater risk of default.  And that’s why inquires can lower a person’s FICO score.

Of course, just because somebody applies for multiple credit lines in a short period of time doesn’t mean they are in financial trouble.  As FICO-Score-Factorswe’ll see below, the FICO formula attempts to distinguish between inquiries that reflect financial strain, and those that do not.  Fair Isaac, the company behind the FICO score, explains the rationale as follows:

Fair Isaac’s research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO score can be lower as a result.

When does an inquiry lower your credit score?

A credit inquiry occurs every time you apply for a credit account.  When you apply for credit, you authorize creditors to ask or “inquire” for a copy of your credit report from the major credit bureaus. Whether you are denied or approved for the credit account does not matter. But what does matter is the type of inquiry.

There are two general types of credit inquiries:  “soft” inquiries and “hard” inquiries.  These are also referred to as soft pulls and hard pulls (pull comes from the creditor “pulling” your credit report).

  • A soft pull, also known as an involuntary inquiry, occurs when creditors want to send you pre-approved offers. That credit card solicitation you received in the mail was probably the result of a soft pull on your credit. Potential employers may check your credit as do your existing credit card accounts, both of which would be soft pulls. And if you check your own credit score, that’s considered a soft pull, too. The key is that a soft pull does not affect your credit score in any way.
  • A hard pull, also known as a voluntary inquiry, occurs anytime you actively seek credit and fill out an application.  The lender will run your credit report and determine whether to approve your credit application and under what terms. A hard pull on your credit report will affect your credit score.

By how much does an inquiry lower your credit score

There are several factors that determine the effect an inquiry has on a FICO score.  Some factors relate to the nature of the inquiries, and some factors relate to the individual’s credit history.  The good news is that generally, inquiries have a small impact one one’s FICO score.

For most people, a single inquiry will reduce their FICO score by less than five points.

Here it’s important to understand that not all hard pulls on your credit report are created equal. For example, applying for multiple revolving accounts such as credit cards in a short period of time represents greater credit risk under the FICO scoring system. Because applying for multiple accounts is viewed as a credit risk, it will negatively impact your credit score.

As an aside, some have used “Credit Card Arbitrage” to avoid the immediate sting of hard pulls on their credit score. The idea behind credit card arbitrage is that you can apply for a lot of credit cards within a short amount of time to take advantage of no interest introductory offers or sign-up bonuses. If you apply for many cards at the same time, the credit card issuers will not see the negative impact of all the inquiries when they evaluate your application. Your score will be negatively impacted once the credit inquires appear on your report, but not before decisions have been made on the credit card applications.

While applying for multiple credit card accounts in a short time period can hurt your credit score, rate shopping for other types of credit is different. For example, you may submit multiple credit applications when shopping for a mortgage, car loan or student loan. Known in the myFICO world as “rate shopping,” the credit scoring system understands that you are shopping for the best rate, not actually applying for multiple mortgages. Assuming you actually open one mortgage, car loan, or student loan account, FICO will treat the multiple applications as just one inquiry.

It’s also important to understand that the impact of credit inquires can vary from one person to the next. The impact can vary depending on what accounts you already have, your current credit score, the length of your credit history and so on. A person with a credit score of 750 that applies for a credit card will not be affected the same way that someone with a 500 credit score is affected when applying for the same credit card. While it’s impossible to exactly predict how an inquiry will affect your score, myFICO does offer a credit score simulator that will give you some idea.

  • If you are looking to obtain your triple credit score for free, you can do so by signing up for the free trial at

One thing to keep in mind is that applying for new credit can also improve your credit score over the long run. Remember that one of the key factors used to determine a FICO score is credit usage (how much you owe as compared to available credit). New accounts increase your available credit, which can be helpful so long as you don’t max out the available credit. When I use myFICO’s credit simulator and assume I open a new credit card account with a $5,000 line of credit, the simulator predicts that my new score will go fall within a range of 10 points lower to 10 points higher than my current score.

As long as you manage your finances appropriately, you should find that credit inquires play a relatively small roll in determining your FICO credit score.  Nevertheless, if you are fighting to improve your credit score, do not take credit applications lightly. Apply for credit with care and only if you really need the credit.


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