While the average credit user probably doesn’t recognize the terms “hard pulls” and “soft pulls”, they are common knowledge to people in the lending industries who are charged with assessing an applicant’s creditworthiness. This is often referred to as a “credit check”. Moreover, these terms are worth understanding because they can have an affect on your FICO score.
Hard pulls generally refer to inquiries that result from actions you took such as applying for a new credit card or a loan. In other words, anyone who initiates checking into your creditworthiness because you applied for credit is making a “hard pull” inquiry.
Nevertheless, not every inquiry made in this way will be considered a “hard pull.” On occasion, people who wish to send you an unsolicited credit card offer or who wish to check on the accuracy of statements you made, will make an inquiry and these are generally considered “soft pulls” or involuntary inquiries.
As previously stated above, “soft pulls” are inquiries that did not result from you making a loan or credit application. The credit reporting agencies ordinarily consider these as account review inquiries and they rarely impact your credit score (FICO) in any negative way.
How hard and soft pulls appear on your credit report
‘Hard Pulls” are considered as regular inquiries and they will stay on your credit report for two years. They include credit inquiries made by other people because you initiated a credit application which may be as simple as a gasoline credit card. These are also referred to as requests viewed by others. FICO scores consider all of this type of inquiry made during the preceding year and too many of these over a short period of time might suggest to credit bureaus and to lenders that you are in a weak current financial position and count against you by impacting your FICO score negatively. Just one or two inquiries will have little if any affect on your credit score. There are situations where you, for example, are shopping for the best loan on a new car, boat, RV or motorcycle and therefore accrue a significant number of “hard pull” inquiries in a very-short period of time. Credit bureaus recognize this trend and it will most likely have no FICO score impact.
Large companies are known for “hard pulls”
Some well-known, larger institutions regularly make “hard pull” inquiries (credit check) that will impact your FICO score even if you are shopping around for the most favorable mortgage terms. Some of these include:
Bank of America
Cingular Wireless (AT&T)
State Farm Auto Insurance
Bank of New York
Obviously, there may be cases where you just can’t avoid dealing with these major firms. The rule to follow, however, is not to deal with too many of them in a very-short period of time. Instead, try to mix-in smaller firms with the giants listed above.