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What’s the Difference Between a “Hard” and a “Soft” Credit Inquiry?
| StreetShares Blog

By StreetShares on September 14, 2018

What’s the difference between a “hard” and a “soft” credit inquiry?

If you’ve been exploring your options for small business funding- or any other debt-based financial product- you’ve probably heard the terms “soft” and “hard” thrown around when referring to credit inquiries. What’s the difference between the two, and how do they affect your personal credit score?

Hard credit inquiry:

  • Often occurs as part of a loan application. You will have to consent prior to a hard credit inquiry.
  • Will have an effect on your credit score.
  • Typically stays on credit report for a year or two and can be seen by anyone who checks your credit report, including future lenders.

Soft credit inquiry:

  • Examples include when a potential employer checks your credit as part of a background check or when companies want to send you pre-approved offers for credit cards or for insurance quotes.
  • Will NOT affect your credit score

Some lenders will run a soft credit inquiry at the pre-qualify phase but will then run a hard inquiry if they give a firm offer of credit or you accept the debt.

Are you a small business owner? Learn how to monitor and build business credit. 

If you’re not sure whether the institution you’re doing business with plans to run a hard or a soft inquiry, just ask! It always pays to be diligent about your credit report, especially if you know you’ll be preparing to apply for a significant loan in the near future- like to buy a home or start a business.

When you apply for small business financing with StreetShares, we let you know if you’re pre-approved within minutes using a soft credit inquiry. Since we’re providing you funding for your business, we don’t run a hard credit inquiry and damage your personal credit score!

This communication is provided for informational purposes only. It is not intended to be an advertisement, a solicitation, or constitute professional advice, including legal, financial,  or tax advice, nor is StreetShares providing advice on any particular situation.

Topics: Growing Your Savings, Veteran Small Business, Funding Your Business

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