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Hard vs Soft Credit Checks: Understanding the Impact on Your Credit Score

When applying for a loan or other line of credit, a lender will perform a credit check on you. There are two types of credit checks: a soft inquiry or a hard inquiry. Understanding the differences between these two types of credit checks is extremely important, as it can affect your overall creditworthiness to a lender.

Hard Credit Checks

Occurrence and Impact on Your Credit Score:

Hard credit checks are typically done when a lender or financial institution reviews your credit history as part of a loan or credit application.

A hard inquiry is usually done when you apply for a mortgage, car loan, personal loan, or credit card application. Each hard inquiry will potentially lower your credit score by a few points and can remain on your credit report for up to two years. These are also visible to other lenders.

Purpose of a Hard Credit Check:

Lenders request hard credit checks to assess your creditworthiness and determine the level of risk involved in giving you credit. When you submit a loan or credit card application, a lender will also require your authorisation to conduct a hard credit check.

Soft Credit Checks

Occurrence and Impact on Your Credit Score:

Soft credit checks are done when a person or company reviews your credit report for informational purposes, such as during a background check, or pre-approving a loan. Checking your own credit score is also deemed a soft inquiry. Unlike a hard inquiry, soft inquiries do not impact your credit score and are not visible to other lenders or creditors.

Purpose of a Soft Credit Check:

Soft credit checks are performed to provide an overview of your credit history without affecting your credit score. They are often used by employers, landlords, or insurance companies to assess your financial stability or eligibility for certain services. No explicit authorisation is required for a soft credit check.

How to Reduce the Impact on Your Credit Report

Credit reports contain a wealth of information about you and your financial affairs, therefore it is important to keep a clean and healthy report. Lenders may have concerns of your financial stability, if too many applications for credit are seen to be made.

Prioritise Soft Credit Checks:

Before applying for a loan or credit card, request a pre-approval or use an online loan calculator to estimate your payments. These methods often involve soft credit checks, which won’t affect your credit score and can provide you with an insight into potential loan offers.

Regularly Monitor Your Credit:

Stay informed about your credit health by monitoring your credit reports and scores regularly. This allows you to identify any errors or discrepancies that may impact your creditworthiness and then take possible steps to rectify them.


Understanding the difference between a soft and hard credit check can help you navigate the financial landscape more effectively. While hard inquiries can have a short-term impact on your credit score, soft inquiries do not affect your creditworthiness. By prioritising soft credit checks, and monitoring your credit, you can manage your credit responsibly and minimise any potential negative effects on your overall credit health.