When you apply for a mortgage, you’ll likely hear about “soft pulls” and “hard pulls” on your credit report. While both refer to credit checks, they have distinct differences and implications for your credit score. Understanding these terms can help you make informed decisions during the home-buying process.
What is a Soft Pull?
A soft pull (also called a soft inquiry) occurs when you pull a copy of your own credit report. These inquiries do not show up on the credit report that lenders or potential creditors may review when you apply for new loans. You can pull your credit report multiple times without affecting your score, which means that this is a great way to monitor your credit.
Soft pulls can also be used by lenders and financial institutions to check your credit score. This allows lenders to assess your creditworthiness and pre-qualification without the pressure of affecting your credit score.
What is a Hard Pull?
A hard pull (or hard inquiry) happens when a lender checks your credit when you’re applying for a mortgage loan. Multiple hard inquiries for mortgage rates within a 30-45 day window are often treated as one inquiry to minimize the impact on your credit score.
Hard pulls can impact your credit score by a few points because they suggest you are seeking credit. While you usually gain back the lost points after 30 days, these inquiries typically remain on your credit report for up to two years.
Also, the scores you see after a hard pull will be the most accurate since they are FICO scores.
Why Am I Seeing a Different Score From My Lender?
It is important to note that the scores you see are going to be higher than your real scores because they are “consumer scores”, which are usually Vantage 3.0 or FICO 8 scores. VantageScore and FICO scores are calculated using different sources of information and different methods. In some instances, the difference between your consumer score and your lender score can be upwards of 100 points, it just depends on the model’s algorithm.
Regardless, the credit score that you should be paying attention to is the one that your bank or lender pulls. That credit score is going to be the determining factor when getting approved for your mortgage loan.
Why Does This Matter for Mortgage Borrowers?
When you’re in the market for a mortgage, it’s important to be aware of how credit pulls affect your score. Soft pulls won’t hurt your credit, but hard pulls can cause a slight dip. If you’re comparing mortgage offers, make sure to do so within a short timeframe to limit the number of hard pulls on your report.
In short, both soft and hard pulls play a role in your mortgage journey. The good news is, understanding the difference helps you manage your credit health and make the best financial decisions.
If you have any questions about soft pulls vs. hard pulls, or how they affect your credit score, don't hesitate to reach out!
