Credit Inquiry – Hard Pull vs. Soft Pull

Have you heard that whenever your credit report gets accessed, your credit score will get lower as well? This is a bit terrifying and unbelievable, right? Well, I’ve got some news for you. It’s PARTLY true. Now, before you start refusing to protect your identity by regularly check your credit score or get your credit report, let me explain.

There are two types of credit inquiries. One is called a “hard inquiry” or “hard pull”. And the other is called a “soft inquiry” or “soft pull”. Only a hard inquiry will cause your credit score to be lowered – based on the credit score formula breakdown.

What’s the Difference Between a Hard Inquiry and Soft Inquiry?

Hard Inquiry/Pull

First, as I mentioned above, a hard inquiry will affect your credit score, while a soft inquiry will not. Hard inquiries are typically well in your control, where you need to provide explicit consent to having someone run it against your social security number. So if you’re applying for a credit card or a loan, you can be sure it’ll be a hard inquiry/pull.

Though one hard inquiry may only affect your score minimally, multiple hard pulls can dramatically cause your score to drop. So make sure you only approve hard pulls once in a while.

Soft Inquiry/Pull

A soft inquiry is usually done without your knowledge, unless you monitor your credit report regularly. Soft inquiries are still visible on your credit report. They just don’t hurt your score.

Employers doing background checks and companies who want to provide you with some credit related offer typically run these. You know that “pre-approved” letters your get? Yep, that company most likely did a soft pull on your before sending out that offer.

And don’t worry; running a credit check on yourself is considered a soft pull. This makes sense because it’s known that securing your identity is extremely important. Credit agencies want you to check your credit report/score regularly. This can help you protect yourself from any mistakes or fraudulent activity.

A Related Story

When I was a freshman in college, I was sucked into applying for a lot of credit cards. I was approved for all the cards I applied for, until maybe my fifth card. After that I started receiving letters that said I was denied because of “too many credit inquiries”. I didn’t think much of why, until now. I was young and only cared about my free t-shirt. A few, I admit, I still use. They keep surprisingly well. If I had known about the ways to improve your credit score, I would have definitely been less inclined to apply for so many at once. Good news is that it didn’t cripple my credit and I’m still in the green of the credit score range.

credit score breakdown

"Figure Out How the FICO Credit Score is Calculated And Use That Towards Your Advantage To Improve Your Credit Score or Simply To Keep It Up!"

Ways To Improve Your Credit Score: Part 3 of 4

« Read Part 2: The FICO Score formula, created by the Fair Isaac Corporation, is proprietary information, so it’s not unveiled to the public. But it’s not a complete secret. This article was written based on a variety of information found online. So, some of the values may be a bit different from what’s actually used, but they are reasonable guesses and will help you to get an idea of how the FICO score is calculated.

By knowing what’s factored into your FICO score, you are another step closer to knowing how to improve your credit score. And at the very least it’ll help you take measures to make sure it doesn’t get lower.

The basic formula provided by FICO is broken down into five parts and how much they weigh towards your score:

  • Payment History – 35%
  • Credit Utilization – 30%
  • Length of Credit History – 15%
  • Types of Credit Used – 10%
  • Recent Search for Credit – 10%

Keep in mind the range of the FICO score is 300 to 850. This means you can’t get a FICO score lower than a 300 and the Read Part 4:

Credit Score Meaning

"Credit Scores Go Beyond Banks and Loans, They Affect Many Parts of Your Life. Learn What A Credit Score Means"

Ways To Improve Your Credit Score: Part 2 of 4

« Read Part 1: Are you trying to figure out what your credit score means to you? Are you wondering if your credit score can help you:

  • Receive a better job offer
  • Qualify for a nicer credit card
  • Get a better insurance rate
  • Obtain a better rate on your loan

Wondering if getting your score gives you any of these benefits or at least a small step towards being financially smarter? Do any of these questions sound familiar? If so, then this article is for YOU! And you should scroll down and read this entire article.

It’s Smart to Be in the Know

There’s really no other way to say it. People who have their financial ducks in a row do MUCH better than those who don’t. Even people who have worse credit than the ones with good credit! Confused? Let me explain.

The numbers we usually have on our minds are our age, cholesterol level, salary, or even sports scores. The simple truth is that your credit score is probably the most important set of numbers attached to your identity that you don’t know, BUT SHOULD.

Though a bit strange, the simple truth is that your credit score can affect:

  • The educational options available to you and your family
  • The neighborhood you live in
  • The life insurance you own
  • The job you are offered

You should know your credit score BEFORE you apply for a loan or make a major financial decision because it will improve your options.

Not knowing your score leaves you vulnerable. This can lead you to be a victim like so many we’ve read about in the housing, banking and job market fall out of the past few years.

Lessons Learned

Yes, we run into hard times and mistakes are made. We have difficulty paying back our credit cards or loans at times. It’s not unusual and it can happen to anyone. But being PREPARED and making sure you are RESPONSIBLE enough to check and monitor your credit score, is a decision that each of us has instant control over.

You need to be proactive, smart, and savvy with your credit in order to guarantee you get the greatest opportunities available and don’t become a victim!

Stay tuned for our next major artilce that discusses the FICO Credit Score Breakdown. Coming soon!

Read Part 3:

Ways To Improve Your Credit Score

Learn What A Credit Score Means To You, How A Credit Score is Calculated, and Some Quick Tips on Improving Your Credit Score!

With the recent financial hardships millions of Americans are facing, it’s more important than ever to make sure you’re protecting and taking steps to improve your credit score.

Through this short series of articles, you will learn:

  • What the credit score meaning is and its affects on your life – Yes, your life! It’s amazing how much your credit score can affect where you live, your education options, and even which job you get. More people should be aware of this. Think of it as being a part of the game of life – your real life.
  • The credit score breakdown in detail – The first step to winning in the credit score game is to understand the rules. I will be discussing how the most commonly used credit score, the FICO Score, is broken down and calculated. Please note that since this is FICO’s bread and butter, their complete formula isn’t public. But the information provided does come through some sound research and are based on reasonable assumptions.
  • 5 best ways to raise credit score – Based on what is known about the FICO Credit Score formula, we can clearly figure out 5 ways to raise your score or keep it up. These tips will help you stay on top of the credit score game and make sure you continually optimize it.

Hopefully these articles will expose you to new information and help you find additional ways to improve your credit score. Please feel free to contact us with your feedback and questions.

Read Part 3: