Two kinds of credit checks
Every time someone looks at your credit report, it’s recorded as an inquiry. There are two kinds, and they’re treated very differently.
- Soft inquiries happen when you check your own credit, when a lender prequalifies you or sends a prescreened offer, or when an existing creditor reviews your account. myFICO says soft inquiries don’t affect your FICO Scores.
- Hard inquiries happen when you formally apply for credit and a lender pulls your report to make a decision. These can lower your score slightly.
Common examples of each
| Usually a soft inquiry | Usually a hard inquiry |
|---|---|
| Checking your own credit report or score | Applying for a personal loan |
| Prequalifying for a loan or card | Applying for a credit card |
| Prescreened “you’re preapproved” mail offers | Applying for a mortgage or auto loan |
| Your current card issuer reviewing your account | Asking for a credit limit increase, at some issuers |
| Some employer or insurance checks | Some apartment and utility applications |
Practices vary by company. If you’re not sure, ask whether a check is soft or hard before you agree to it. Only hard inquiries show up to lenders who review your report; soft inquiries are visible only to you.
How much a hard inquiry costs
Less than most people fear. According to myFICO, one additional inquiry takes less than five points off most people’s FICO Scores. Hard inquiries stay on your credit report for up to two years, but FICO only counts them for one year.
The impact can be bigger if you have a short credit history or few accounts, because each inquiry carries more weight. Several new applications in a short time can also signal to lenders that you’re taking on a lot of new debt.
Context matters: payment history makes up 35% of a FICO Score and amounts owed 30%. New credit, which includes inquiries, is 10%. Paying on time does far more for your score than avoiding a single inquiry.
What rate shopping does to your score
FICO groups multiple inquiries for some loan types into one when they happen close together. myFICO says inquiries within any 14-day span count as one under older scoring versions, and within any 45-day span under the newest. For mortgage, auto and student loans, FICO also ignores inquiries made in the 30 days before scoring.
Personal loans aren’t named in that rate-shopping rule, so it’s safest to assume each personal loan application can count as a separate hard inquiry. That’s why the order you shop in matters.
| Step | Type of check | Score impact |
|---|---|---|
| Checking your own credit report | Soft | None |
| Prequalifying for estimated rates | Usually soft | None |
| Prescreened offers in the mail | Soft | None |
| Formal loan application | Hard | Usually under 5 points |
How to shop for a personal loan the smart way
- Check your credit reports first. You can get free reports from Equifax, Experian and TransUnion every week at AnnualCreditReport.com, a change the FTC says is now permanent. Fix errors before you apply.
- Prequalify with several lenders. Prequalification usually uses a soft check and shows estimated rates. Confirm it’s a soft check before you submit.
- Compare offers by APR and total cost. The APR includes fees, so it’s the fair side-by-side number.
- Apply formally with the one you choose. That limits hard inquiries to the offer you actually want.
Through Riverstone, lenders in our network typically use a soft credit check to show initial offers. If you accept one and complete the lender’s application, that lender may run a hard inquiry. See your options.
Three myths about credit checks
“Checking my score will lower it.”
Not true. Looking at your own credit is a soft inquiry. You can check as often as you like without any effect on your FICO Scores.
“Every inquiry costs a lot of points.”
For most people, one hard inquiry takes off fewer than five points, and FICO stops counting it after a year. Missing a payment does far more damage than an application.
“Shopping around always hurts.”
Prequalifying with soft checks lets you compare estimated rates from several lenders without touching your score. The hard inquiry only comes when you choose an offer and formally apply.
What happens to an inquiry over time
- Day one: the hard inquiry appears on the report from the bureau the lender used. Lenders may pull one, two or all three bureaus.
- Months 1–12: FICO can factor the inquiry into your score, with the effect usually small and shrinking.
- Months 13–24: the inquiry still shows on your report, but FICO no longer counts it.
- After two years: it drops off your report entirely.
Your rights if something looks wrong
Under the Fair Credit Reporting Act, only businesses with a permissible purpose can pull your report. If you see a hard inquiry you don’t recognize, it may be a sign of identity theft. The CFPB recommends disputing errors with both the credit bureau and the company that supplied the information. Learn more on our credit scores guide.
Frequently asked questions
Does checking my own credit hurt my score?
No. Checking your own credit is a soft inquiry, which doesn’t affect your FICO Scores.
How many points does a hard inquiry take off?
For most people, less than five points, according to myFICO. The effect fades, and FICO stops counting the inquiry after one year.
Do multiple personal loan applications count as one inquiry?
FICO’s rate-shopping rule groups inquiries for loans like mortgages and auto loans. Personal loans aren’t named, so assume each application can count separately and prequalify before applying.
Does prequalifying guarantee approval?
No. Prequalified rates are estimates. The lender confirms your details during the formal application and may change or decline the offer.
This article is general information, not financial advice. Rates and rules change; check the linked sources for the latest figures.