Difference Between Hard Credit Check and Soft Credit Check

A major fact of life is that whoever you get financing from will likely evaluate your financial status – and do it regularly. Whenever you apply for a loan or sign up for a new cell phone plan, lenders and businesses could make a “hard” pull of your credit report to get a sense of how you handle spending and debt payments.¹

With American Express’ “soft inquiry” application process, though, you can know up front whether your card application is approved before you choose to accept and open an account. A soft inquiry may also be used to offer you a preapproval deal.

Credit pulls happen when someone, even you, takes a look at your credit. When you officially apply for credit a lender may run a hard check, which could cause your score to dip slightly. Soft checks, however, happen with preapprovals, or when you check your credit report for yourself – which you should do from time to time to keep an eye out for mistakes or identity theft.² Soft checks don’t impact your credit score. But here’s how hard and soft pulls differ:

Hard inquiries

These should happen only when you formally request some form of credit, whether you’re borrowing money or opening a new electric utility service.¹ Hard pulls typically cause a small temporary ding to your credit score.^1,3 With U.S. American Express personal card applications, a hard pull only occurs after you’ve been approved and after you’ve accepted a credit card, not during the application process itself.

Soft inquiries

These happen when you check your own credit report or when a business checks it without you requesting credit.¹ A soft pull has no impact on your credit score.¹

Understanding the differences between soft and hard credit checks can help you avoid any unnecessary dips in your credit score.

Besides applying for a loan or a new credit card, there are other financial moves that will create a hard credit pull. Landlords or leasing managers may make a hard pull when you apply to rent a place.⁴ The same can hold true when you sign up for a cell phone plan.⁵ Even renting a car might trigger a hard inquiry credit check if you pay with a debit card instead of a credit card.⁶

Each hard inquiry stays on your credit report for two years, but when FICO calculates your credit score, it only considers credit inquiries made during the last 12 months.⁴ And even during that first year, the impact may be generally about five points to ten points, depending on your credit history.^7,8 That’s a minor ding compared to other financial moves that can trigger a big credit score drop.

The reason a hard inquiry impacts your credit score is because you’re asking for credit in one form or another. Hard inquiries also serve as a heads up to businesses checking your credit. If they see multiple hard inquiries popping up over a few weeks or months, that can be a yellow flag that you may become financially overextended.³

American Express’ application process means that you can apply for a U.S. personal credit card with confidence, knowing that simply submitting an application will not impact your credit file. A hard check will only happen once you’ve been approved and have formally accepted the card. If you apply for an American Express business card, however, a hard credit check will happen regardless of the application decision.

There is a way to minimize the impact of hard pulls on your credit score when shopping around for a loan. The two main credit scoring models, FICO and VantageScore, don’t penalize you for being a smart comparison shopper who submits loan applications to a few different lenders for the same type of credit as long as you do it over a relatively short time span.^3,9

Say you’re shopping for a car loan. You’re allowed a window of time where all hard inquiries related to a similar type of loan will be bunched together and count as just one hard inquiry. This shopping window ranges from 14 days to 45 days, depending on which version of a credit scoring model is being used.^3,9 A safe move is to try and get all your loan apps submitted in a two-week period.

Did you know? American Express has updated the application process to be more transparent. Now you can see if you’re approved for a U.S American Express Personal Card with no impact on your credit score. If you’re approved and choose to accept the card, the information American Express provides to the credit bureau(s) may impact your credit score. Learn more.

When you or a business just want to check your credit report – without any formal request for money or credit – it counts as a soft credit pull.¹ You can think of soft credit inquiries as non-events, as they have no impact on your credit score.¹ Here are some soft pull examples:

• Unsolicited offers: Those preapproval offers many people receive for new credit cards, car lease deals, or mortgage refinancing are typically the result of a business doing a soft pull to find good candidates.¹ But if you decide to actually apply for a deal you’ve been preapproved for, now you’re formally asking for money or credit – and that will trigger a hard inquiry.¹⁰
• Existing credit relationships: Once you have a loan or account with a business, they might check your credit report from time to time just to make sure all remains good.¹ It counts as a soft pull.