Hard and Soft Credit Inquiries: How to Get Rates Without Affecting Your Credit Score

The advantage of using Credible to see the actual rates and terms you can qualify for with multiple lenders is that eligible borrowers get personalized rates instantly — without affecting their credit score or sharing their personal information with lenders until they’re ready to choose a loan.

In this article, we’ll explain the difference between a “hard” credit inquiry and “soft” inquiry, and why using Credible to request personalized rates generates a soft inquiry that does not affect your credit score. The lender will conduct a hard credit inquiry when you apply that could temporarily lower your credit score. We’ll also give you examples of the kind of activity that can generate a hard inquiry — including several that might surprise you.

What determines whether a credit inquiry is hard or soft, and why does a hard inquiry sometimes affect your credit score, when a soft inquiry does not? Read on.

Hard credit inquiries

Hard credit inquiries are triggered when you initiate a process with a lender or other creditor that might increase your debt burden. If you apply for a mortgage, a car loan, or a new credit card, your lender will ask for permission to check your credit, and that will count as a hard credit inquiry.

You don’t have to apply for a loan to trigger a hard credit inquiry. If you apply for an increased line of credit, that can generate a hard credit inquiry. If you’re about to sign a lease on an apartment and authorize your prospective landlord asks to check your credit report and credit score, that would count as a hard credit inquiry.

You might be surprised to learn that checking out a rental car with a debit card, switching cell phone plans, or getting a company business card in your name from your employer can also generate hard inquiries (more on those unusual situations below).

Why a hard credit inquiry can ding your credit score

Why does a hard credit inquiry affect your credit score? Because taking on more debt could affect your ability to make payments on the loans that you already have, or may take out in the future.

Remember, you credit score is, at its most basic, an evaluation of your ability to repay debt and the likelihood that you won’t be able to. According to Fair Isaac Corp., the creator of the widely used FICO score, a borrower with six or more hard inquiries on their credit report is eight times as likely to declare bankruptcy than a borrower with no inquiries.

How much does a hard credit inquiry hurt my credit score?

What will a hard inquiry do to your credit score? Again, according to Fair Isaac, a voluntary hard credit inquiry that’s initiated when you apply for credit may not affect your FICO score at all. If it does, it will typically take less than 5 points off. But if you don’t have many credit accounts — or your credit history doesn’t go back very far in time — a hard credit inquiry can take more than 5 points off your FICO score. So while a single hard credit inquiry probably isn’t worth getting too worked up about, generating several before taking out a loan may affect the rate you’re offered.

Soft credit inquiries

When you request personalized rates from Credible, you’re authorizing a soft credit inquiry that has no effect on your credit score.

That’s because at this initial stage in the process, you’re not actually applying for a loan. Credible is not a lender, but a marketplace that helps you find the best loan — and lender — for your unique situation. Once you apply for the loan, the lender will conduct a hard credit check, which could temporarily ding your credit score.

Authorizing Credible to make a soft credit inquiry is what allows us to show you accurate rates. We’re connected to all three major credit bureaus — Equifax, Experian, and TransUnion — that collect information about borrowers’ credit lines and payment histories. That information can be plugged into proprietary formulas that generate credit scores.

Once you give us the go-ahead to do a soft credit inquiry, we can run your credit history and credit score through criteria used by our partner lenders and show you not only which ones are ready to lend to you, but on what rates and terms.

This is a process sometimes described as “prequalification.” Until you choose a loan you’d like to apply for, lenders don’t even see your information. Just checking your rates won’t hurt your credit score, or generate a marketing blitz from lenders who are eager to do business with you.

Another good thing to know is that you can always request a copy of your own credit report without triggering a hard inquiry. Checking your credit report before you apply for a loan is considered a soft inquiry — one that could save you money, since the interest rate you’re offered will often depend on your credit score.

If there are mistakes on your credit report or other issues you can take care of, the best time to tackle them is before you apply for a loan 

The bottom line is that if someone besides you accesses your credit report, it doesn’t count as a hard inquiry if you haven’t applied for a loan or initiated a transaction that could increase your monthly debt obligation.