If you’ve been reading the Quizzle blog, you know that building your credit reports and scores relies on establishing good habits: steady bill-payment discipline, not overextending yourself in terms of credit utilization, etc. But building credit is a means to an end–you’re going to put your good scores to work for you at some point, and that can be a “game of inches”.
When lenders, insurers, and others check your credit, the difference between getting approved or denied can come down to a few points–where you fall in a range of risk. That’s why it’s important to know some of the less-publicized ways of improving your reports and scores–and more to the point, preventing any needless damage from occurring.
You probably know that often, when someone checks your credit, your scores can take a momentary hit. But did you know which inquiries cost you and which ones don’t?
The difference between the two is referred to as a “hard” credit pull and a “soft” credit pull. A hard pull is when someone checks your scores after you’ve, basically, requested they do so by applying for a new line of credit. A good example of this are store credit cards.
Many folks are lured into applying for a store card to knock some percentage off that day’s bill–but these result in a hard pull, and can cost you a few points that might end up being crucial. Say you’re in the process of applying for a mortgage loan–that’s the worst time to go looking for new credit.
By contrast–and contrary to some misinformation floating around out there–your scores don’t suffer if you, yourself, check your credit. That costs you nothing. That’s what Quizzle offers when we provide your free credit reports and scores–they’re not just free-of-charge, they’re free of unintended damages, too. Other soft pulls include when certain companies review your credit before offering you their various products and services. The credit card offers you get in the mail, for instance, are typically tailored to your financial situation via a soft inquiry into your report.
Since the margin of error, for some folks, is pretty slim when it comes to obtaining a home or car loan, it’s key to know the difference and avoid shooting your credit scores in the foot.
Check out these links on hard and soft credit pulls from the Quizzle blog and beyond: