As a simple rule of thumb, a “hard” inquiry (or hard “pull”) into a consumer’s credit history is one that requires the consumer’s consent, such as when the consumer applies for a credit card or a loan. This contrasts with a “soft” inquiry (or soft “pull”), which can be done without the consumer’s consent. The other key difference between hard and soft inquiries is that hard inquiries negatively affect a consumer’s credit score.
The severity of a hard inquiry’s impact on a consumer’s credit report depends on the type of score and the timing of the inquiry. Depending on the inquirer’s particular request, a credit reporting bureau—e.g., TransUnion, Experian, or Equifax—will provide the consumer’s credit history along with, typically, a FICO or VantageScore credit score. A hard FICO score inquiry could reduce a credit score by up to 5 points, whereas a VantageScore inquiry will shave off anywhere from 10 to 20 points.
The type of hard inquiry—i.e., FICO versus VantageScore—is also a factor in how “rate shopping” impacts one’s credit report. If a consumer’s credit is pulled multiple times over a short timespan, as often occurs when shopping for the best rate for a home or auto loan, FICO will treat all such inquiries within a 45-day period as a single hard inquiry. VantageScore, on the other hand, only consolidates hard inquiries made within a rolling two-week window. While FICO and VantageScore assign different weights to hard inquiries for the purpose of calculating a credit score, a hard inquiry of any kind will only affect a credit score for up to one year and will (should) fall off a consumer credit report altogether after two years.
While soft inquires can be performed without a consumer’s knowledge, the Fair Credit Reporting Act not only requests the consumer’s consent for a hard credit inquiry, it also requires the consumer to have notice of the credit event. It may seem obvious that if a consumer gives consent they necessarily are on notice, but this separate requirement actually serves to better protect the consumer.
When a hard credit inquiry is performed without the consumer’s consent, the inquirer not only violates the law requiring consent but also violates the rule requiring notice. The threat of a second violation and its associated penalties serves as a deterrent for inquirers to disregard consumer rights under the Fair Credit Reporting Act.
Since hard inquiries affect a consumer’s credit score, they must appear on the consumer’s credit report, which the consumer can monitor at no cost and without penalty. When a consumer discovers a hard inquiry for which they did not provide consent and were not notified, they should promptly file a dispute with the reporting bureau. If the reported inquiry was in error or if the inquirer cannot prove that consent was actually obtained, the hard inquiry should be removed and the consumer’s credit score should increase in response.
A simple reporting error or a non-consensual hard inquiry is not without consequence and can impact a consumer’s ability to access credit unless and until the consumer discovers the error and takes action to have it removed. While it may be annoying or arduous for a busy consumer, the consequences of failing to discover and correct an erroneous credit inquiry could be dire. Unfamiliar activity on a consumer credit report is often an indication of identity theft, so a consumer should keep an eye on every aspect of their credit report and take prompt action if and when anything unfamiliar crops up.