Credit checks are very important when it comes to finance, as they influence various things including loan approval and rental applications. When doing credit inquiries, there are two main types of credit checks; hard pull and soft pull credit checks. It is crucial to understand these two types of credit checks to manage your credit health and assist you in making wise financial decisions.
What are the differences, and which is better?
Hard pulls often have a temporary negative impact on your credit score. This is because, for each hard inquiry, you will incur a small decrease in your credit score. At first, it may look negligible, but multiple inquiries within a short period will lower your credit score by a large margin. On the other hand, soft pulls don’t have any impact on your credit score. The reason is, that they are not usually tied to credit applications.
Hard pull inquiries usually remain on your credit report for up to two years. Even though they persist on the report, the impact they have on your credit score reduces over time. Soft pull credit checks are, however, not visible to lenders and do not appear on the credit report. This means that lenders will not consider them when making credit decisions. Watch the video above to learn more about credit checks.
