Think of your credit file as being in a manila envelope, or a briefcase if you’re fancy. Every time that briefcase is opened it’s recorded as an inquiry. There are two types of inquiries, hard and soft.
No we are not talking about tacos here, stay with me.
Hard and soft inquires affect your credit score differently and it’s important to know the difference between them.
Inquiries are recorded as hard when someone opens your file with the intention of issuing you new credit. Apply for a new credit card? Hard inquiry. Apply for a mortgage or car loan? Hard inquiry. If you are ever told that you have too many inquiries on your credit this is what they are talking about. These types of pulls will affect your credit score so you should avoid them unless they are necessary.
Soft inquires occur when someone pulls your credit when they don’t have the intention of issuing you new credit. Why would someone pull your credit if they have no intention of issuing credit? Well one reason is because you have a line of credit with them (like a credit card) and they want to make sure you aren’t defaulting on other accounts. Another reason is to send you those annoying pre-approved offers. They do a soft pull of your credit to see what type of offer for which you would qualify. Then if you apply for the offer they do a hard inquiry when they actually loan you the money. When you check your own credit it’s also a soft inquiry. These types of inquiries do not affect your score. So if you want to check your own credit before applying for a loan feel free. It won’t hurt you.
What about if you apply for an apartment? Most likely it will be a hard hit.
What about an employer checking your credit for potential employment? Most likely it will be a soft inquiry.
What about when asking for a credit limit increase? Most likely it will be a soft hit. They are probably pulling your credit every month as a soft inquiry already and have a good idea of your credit.
What about when getting a cell phone, new electric service, cable, etc? Most likely it will be a hard hit. Update: Republic wireless does not check credit.
Figure this, if they are pulling your credit in order to enter into a financial agreement, ie; an apartment lease or cell phone contract, it will be a hart hit. If they are pulling it for informational purposes, ie; a background check, it will be a soft hit. When in doubt, please ask. If they can’t answer then assume it will be a hard hit.