Hard & Soft Credit Inquiries: What They Are And Why They Matter

A hard inquiry may impact your credit scores and stay on your credit reports for about two years. By contrast, soft credit inquiries won’t affect your scores.

Your pie is divided into slices, each of which represents a different factor that goes into your credit scores. One large slice is your open credit card utilization rate, another is your percentage of on-time payments, another is the length of your credit history and yet another is the number of derogatory marks on your credit reports.

And then there’s a tiny slice that represents your hard credit inquiries. Every time you apply for more credit, you take a small bite out of this slice. But what exactly is a hard inquiry, and how much of an effect does it really have on your credit?

Let’s start with the basics.

What is a hard inquiry?

Hard inquiries (also known as “hard pulls”) generally occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them.

A hard inquiry could lower your scores by a few points, or it may have a negligible effect on your scores. In most cases, a single hard inquiry is unlikely to play a huge role in whether you’re approved for a new card or loan. And the damage to your credit scores usually decreases or disappears even before the inquiry drops off your credit reports for good.

Common Question

How long will a hard inquiry stay on my credit reports?

Generally speaking, hard inquires stay on your credit reports for about two years.

That doesn’t sound so bad, but you may want to think twice before applying for a handful of credit cards at the same time — or even within the span of a few months. Multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer, as it suggests you may be short on cash or getting ready to rack up a lot of debt. So consider spreading out your credit card applications.

What is a soft inquiry?

Soft inquiries (also known as “soft pulls”) typically occur when a person or company checks your credit as part of a background check. This may occur, for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain credit card offers. Your employer might also run a soft inquiry before hiring you.

Unlike hard inquiries, soft inquiries won’t affect your credit scores. (They may or may not be recorded in your credit reports, depending on the credit bureau.) Since soft inquiries aren’t connected to a specific application for new credit, they’re only visible to you when you view your credit reports.

Common Question

Will checking my own credit scores result in a hard inquiry?

No. This is reported as a soft inquiry, so it won’t lower your scores. You can check your VantageScore 3.0 credit scores from two major credit bureaus, TransUnion and Equifax, for free at Credit Karma as often as you like without affecting your credit scores.

Examples of hard and soft credit inquiries

The difference between a hard and soft inquiry generally boils down to whether you gave the lender permission to check your credit. If you did, it may be reported as a hard inquiry. If you didn’t, it should be reported as a soft inquiry.

Let’s look at some examples of when a hard inquiry or a soft inquiry might be placed on your credit reports. Note: The following lists are not exhaustive and should be treated as a general guide.

Common hard inquiries

• Mortgage applications

• Auto loan applications

• Credit card applications

• Student loan applications

• Personal loan applications

• Apartment rental applications

Common soft inquiries

• Checking your credit score on Credit Karma

• “Pre-qualified” credit card offers

• “Pre-qualified” insurance quotes

• Employment verification (i.e. background check)

Keep in mind, there are other types of credit checks that could show up as either a hard or soft inquiry. For example, utility, cable, internet and cellphone providers will often check your credit.

If you’re unsure how a particular inquiry will be classified, ask the company, credit card issuer or financial institution involved to distinguish whether it’s a hard or soft credit inquiry.

How to dispute hard credit inquiries

We recommend checking your credit reports often. If you spot any errors, such as a hard inquiry that occurred without your permission, consider disputing it with the credit bureau. You may also contact the Consumer Financial Protection Bureau (CFPB) for further assistance.

This could be a sign of identity theft according to Experian, one of the three major credit bureaus. At the very least, you’ll want to look into it and understand what’s going on.

Keep in mind, you can only dispute hard inquiries that occur without your permission. If you’ve authorized a hard inquiry, it generally takes two years to fall off your credit reports.

How to minimize the impact of hard credit inquiries

When you’re buying a home or car, don’t let a fear of racking up multiple hard inquiries stop you from shopping for the lowest interest rates.

FICO gives you a 30-day grace period before certain loan inquiries are reflected in your FICO® credit scores. And FICO may record multiple inquires for the same type of loan as a single inquiry as long as they’re made within a certain window. For FICO scores calculated from older versions of the scoring formula, this window is 14 days; for FICO scores calculated from the newest versions of the scoring formula, it’s 45 days.

Similarly, the VantageScore model gives you a rolling two-week window to shop for the best interest rates for certain loans. “That way, they only impact your credit score once,” the company says.

Bottom line

Your credit scores play a big role in your financial well-being. Before applying for credit, take time to build your credit scores. With stronger credit, you may improve your chances of being approved for the financial products you want at the best possible terms and rates.

To help you keep track of hard inquiries that may influence your credit scores, check your credit report from TransUnion at Credit Karma. While one hard inquiry may knock a few points off your scores, multiple inquiries in a short amount of time may cause more damage.

How To Ask For A Credit Limit Increase?

Raising your credit card's limit boosts the credit you can access, but you'll need to figure out how much to request and how to make your case.

Before we get into how to ask for a credit limit increase, let’s review a more basic question:
What is a credit limit?

A credit limit is the maximum amount your credit card issuer will allow you to charge on a single credit account. Pretty simple, right? But what actually happens if you meet or exceed that limit?

If you go over your credit limit, your card issuer may simply decline the transaction. Some card issuers may allow charges that exceed your credit limit, but they typically charge an over-limit fee of up to $25 the first time you go over your limit and up to $35 if you do it again within six months. Heads up: A card issuer can’t charge an over-limit fee unless you’ve agreed to permit over-limit charges on your card.

Spending more than your credit limit may come with other consequences, as well. Your card issuer may decrease your credit limit if you’re a repeat offender, and your required payment may increase because you’ll have to pay the amount you spend over your limit in addition to your minimum payment.

Common question:

How do credit card issuers determine my credit limit?

A credit card issuer will assess your credit history, income and how much existing debt you have. They will set your credit limit based on those and other factors. Typically, the better your credit history, the higher your credit limit will be.

The good news? Your credit limit can also swing the other way. In some instances, if you’re a responsible spender and routinely pay off your balance on time, the card issuer might automatically raise your credit limit even if you didn’t ask for an increase.

But card issuers don’t always automatically increase your credit limit. If you want a credit limit increase, most of the time you must be proactive. This means calling your card issuer and explaining why you deserve an increase to your credit limit.

Sound intimidating? Don’t worry. We’ve put together a step-by-step guide for how to ask for a credit limit increase. Check it out below.

How to ask for a credit limit increase

1. Ask yourself why you want a credit limit increase

2. Know your credit history

3. Gather the documents you’ll need when you ask for a credit limit increase

4. Make your case

1. Ask yourself why you want a credit limit increase

If you’re thinking about asking for a credit limit increase on your credit card, the first step is to assess your current financial situation. Consider the pros and cons of a credit limit increase.

On the plus side, a higher credit limit may lower your credit utilization rate if you keep your balance under control, says Bruce McClary, vice president of public relations and communications at the National Foundation for Credit Counseling.

Credit utilization is the amount of available credit you’re using out of your overall credit limits. It’s one of the factors that make up your credit scores. Most experts recommend keeping your overall credit utilization below 30%. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it.

You can figure out your credit utilization rate by dividing your total credit card balances by your total credit card limits. Having a higher credit limit on one or several card accounts can help keep your utilization rate below 30%.

Then again, a higher credit limit could also lead to trouble. A higher limit may lead some to feel that there is that much more room to spend.

As is usually the case, it’s best to spend responsibly and within your means. Just because a higher credit limit may allow you to charge an expensive electronic device or pay for a vacation doesn’t mean that asking for a higher limit is the right option for you.

It’s not a good idea to request a credit limit increase for an impulse purchase, especially if the item is not a necessity. Card issuers may also view applying for a mortgage or auto loan right before requesting a credit limit increase as an indication of a high-risk customer, he notes, because it could indicate that you’re about to take on a large amount of debt.

2. Know your credit history

This is one step we can definitely help with. Get your free VantageScore credit scores and reports from two major credit bureaus at Credit Karma to help figure out your next move. And don’t worry — checking your credit scores on Credit Karma is a soft inquiry, which will never affect your credit.

Heads up, though: When you request a credit limit increase from your credit card company, it may perform a hard inquiry to determine your eligibility. This can affect your credit scores. A hard inquiry from a credit limit increase request is a normal part of the process of applying for new or additional credit.

A hard inquiry remains on your credit reports for approximately two years and may impact your credit scores for one year or more depending on the scoring model used. The impact can vary widely depending on the rest of your credit. For example, if you don’t have very much credit history established, a hard inquiry may impact you more.

For example, one hard inquiry may not affect your credit scores at all or it may decrease your scores by less than five points. On the other hand, if you have only a few accounts or a short credit history, hard inquiries can have a greater impact on your scores. That’s why you should know your credit history before you ask for a credit limit, especially if you’re expecting additional hard inquiries from any other credit requests.

So, how much will asking for a credit limit increase hurt my credit scores?

One hard inquiry resulting from your credit limit increase request will typically only result in a minor dip in your credit scores. There are many different types of scoring models, so a person doesn’t have just one credit score. Credit scoring models are proprietary, so it’s impossible to know exactly how many points a credit score will change as a result of a hard inquiry.

3. Gather the documents you’ll need when you ask for a credit limit increase

Your card issuer may want to know your current annual income, employment status and how much you pay for housing each month. Have that information ready to go before you call.

That’s right, we said call. You can sometimes ask for a credit limit increase by applying on your card issuer’s website, but you’ll have a better opportunity to ferret out information if you speak to a representative on the phone.

If you request an increase over the phone, you’ll be able to talk to the representative and ask questions or see if there’s an amount of additional credit you could get without a hard inquiry, so that may be better in certain situations.

4. Make your case

When asking for a credit increase, it’s a good idea to stick to the basics, says McClary. Keep the request simple and straightforward.

Here are some tips for how to go about it.

• Have your talking points prepared beforehand, such as why you want the increase and how much of an increase you’d like.

• Make a list of questions you want answered before committing to the request. For example, will you be able to ask for another credit limit increase later if you want one? Will this request result in a hard inquiry on your credit reports?

• Be polite and explain why you’re asking for a credit limit increase. Don’t lose your cool if things aren’t going your way or if the representative has an attitude. Instead, consider getting off the call and trying again later with a different agent.

• If you don’t succeed, ask why. You’ll want to know the exact reason the increase was denied so you can work on creating a situation where you’re more likely to be approved. If you’re juggling too many high balances, for example, create a plan to pay them down. Once you’re in a better position, you can try again.

Most of the factors that will determine success are determined before the conversation begins, says McClary. “What you say may not increase the likelihood of approval if you are working against a low credit score or a poor payment history with that creditor.” Still, saying the right things certainly won’t hurt your case.

If you get a credit limit increase, you may improve your credit scores by lowering your credit card utilization rate and keeping the balance low. At the same time, having more credit available could be so tempting that you end up with more credit card debt than you can comfortably pay off. If you’re careful to not take on more than you can handle, a higher limit allows you to make large purchases more efficiently, possibly racking up more rewards points along the way.

Before you ask for a credit limit increase on your credit card, first assess your current financial situation. Be honest with yourself about why you want a higher credit limit. Then, if you still think a credit limit increase is in your best interest, contact your card issuer and make your case.