Hard inquiries, soft inquiries, hard pulls, soft pulls…
I’ve talked about these several times, in various interviews or posts, but what exactly are they?
How do banks use them when applying for loans or credit cards?
And why are these important when it comes to your credit score?
What is a Hard Inquiry?
A hard inquiry is a request from a bank or other financial institution to view your credit report. This is done as part of an application process, either credit card or loan.
What makes hard inquiries so prominent is that it directly affects your credit score and can stay on your credit report for up to two years.
Hard inquiries, also called hard pulls, can hurt your credit score, especially if you’ve been applying for a number of different cards or loans.
Equifax actually has a great video that goes deeper into hard inquiries:
What is a Soft Inquiry?
Soft inquiries are also requests from financial institutions to view your credit report, however, unlike hard inquiries these don’t affect your credit score.
There’s a misconception that checking your own credit report is a hard pull, but it’s actually considered a soft pull.
Other soft pulls include those done as part of background checks for employers or by credit companies who are looking to offer you a new credit card.
How Do Banks Use Hard or Soft Pulls?
Now that you’re aware of what these are and what the difference is, let’s talk about how banks use these pulls.
When banks receive a credit or loan application, they will pull from one of the 3 credit bureaus:
TransUnion
Equifax
Experian
Some banks only pull from one of these, however there are some banks or institutions that will pull for all three.
Capital One, for instance, sends to do hard pulls from all three bureaus. This is a major reason why I don’t recommend getting one of their cards.
However, if you’re trying to repair your credit, they can be a good card to get, but only in those types of cases.
If you’re applying for different credit cards, you should be doing so in a strategic manner.
So for instance, if you’re applying for different cards, you should ensure that you’re applying with banks that aren’t pulling from the same bureaus.
One resource that we have in the Credit Stacking course community is an inquiry database that’s mostly populated by students.
This is an ongoing list - from students, by students, and for students – that shows which banks pull from which credit bureau.
One thing to mention is that each state’s bank might be different and of course, each state has its own local banks.
For instance, a Bank of America in Washington might pull from TransUnion, but a BoA in California might pull from Equifax.
A great site to check this is the Credit Boards, where you can select your state and then sort by which bank you want information on.
Again, as an example, if you live in Arizona, then you would select that from the state selection and then look for whatever bank you want to apply for.
Guys, we put together a huge list of lenders and where they pull from in this exclusive ebook:
If you want to learn even more about hard and soft pulls, then definitely come join our fabulous community.