The precise formula that credit reporting agencies use to determine your credit score is as elusive as Google’s PageRank algorithm. But there are some things we consumers understand well about the factors that go into your credit rating. One such item that has a weighty presence on your credit report is a credit inquiry – that is, when someone (including you) checks out your credit history for whatever purpose. Conventional wisdom dictates that having many credit checks on your credit report is bad, while having fewer is better. But that’s not necessarily true.

There are two kinds of credit inquiries – one that affects your score and one that doesn’t. In common parlance, these are referred to as “hard pulls” and “soft pulls,” respectively. Of course, when you fetch your credit report from Transunion, Experian  or Equifax, it won’t list out which is which in those terms. So how do you know what’s mucking up your credit rating? Read on to find out.

What’s a “Hard Pull” on your Credit?

A “hard pull” or a “hard credit check” is a credit inquiry that you have initiated. Because of that, they are sometimes called “voluntary inquiries.” Essentially, this means that there shouldn’t be any hard pulls on your credit history that you don’t know about. Typically, companies will let you know if they are going to run a credit check on you (i.e. if you’re starting up utilities, such as telephone service, gas or electric). Other times, it’s obvious (i.e. if you’re signing up for a credit card, applying for a loan, or opening a bank account).

So how do you spot one on your credit report? That all depends on whose reporting. Here’s a quick and easy breakdown:

TransUnion – hard pulls are listed as “regular inquiries” and remain on your credit report for two years.

Experian – “Requests viewed by others” is the equivalent of a hard pull. Experian doesn’t offer any more info  on how long they stick around, but does note that “creditors may view these items when evaluating your creditworthiness.” Check out this explanation for more details.

Equifax – “Inquiries in the last 12 months” are what hard pulls masquerade as in Equifax reports and, clearly, stick around for one year. Equifax, however, will cut you some slack if there are several inquiries posted around the same time, as they’ll assume that you are simply shopping around for a mortgage or auto loan.

Keep this in mind the next time you’re dealing with anyone who may be interested in your credit history. Most of the time, having someone ask for your Social Security number is a dead giveaway. Still, sometimes you can get blindsided by a hard pull. FatWallet.com has a sticky list of notorious hard pullers that has been kept current since January 2004. Bookmark it.

“Soft Pulls” and Other Stuff You Shouldn’t Worry About

If you have a mailbox and a first and last name, you’ve probably been bombarded by ecstatic letters informing you that you’re “pre-approved” for a veritable smorgasbord of credit cards.  The term “pre-approved” kind of implies that they’ve pulled your credit history, which, according to what you knew about inquiries before reading this article, is bad news. But don’t worry. Such checks on your credit are “soft pulls” or involuntary inquiries.

A soft pull can be initiated by anyone without your express consent. As such, less information is shown and there is no impact on your credit rating. In fact, only you can see soft pulls on your account. So don’t be alarmed when you see a plethora of unfamiliar soft credit checks on your credit report. For the top three credit reporting agencies, soft pulls are listed as follows:

TransUnion – “Account review inquiries” are the same as soft pulls and can’t be seen by other lenders or creditors and thus will not be considered when weighing out your creditworthiness.

Experian – “Requests viewed only by you” are soft pulls in Experian’s book and don’t affect your credit rating.

Equifax – Soft pulls are helpfully listed here as “inquiries that do not display to companies and do not impact your score.” It’s important to note that Equifax has a third category, called “companies that requested your credit file.” While Equifax discloses that lenders may be able to view these items, the inquiries that show up in this list are often those that would be classified as “soft pulls” for other reporting bureaus. How much weight lenders give these items is unclear, though.

So, who are the usual suspects for soft pulls? The answer to that is nearly anyone and everyone. The legal restrictions on running an involuntary credit check on you are significantly less stringent, so you’ll likely have a lot of credit card companies checking you out. Also, institutions with which you already have an account may run occasional checks on you as well. In the end, these inquiries amount to small (or virtually nonexistent) potatoes.

The Bottom-line: Effects on Your FICO

How worried should you be about hard pulls? Realistically, not very. MyFico.com’s breakdown lumps “recent credit inquiries” into the 10 percent piece of your overall FICO score pie that represents “new credit,” meaning that all of your hard pulls combined equal less than 10 percent of the bottom-line. One or two hard pulls are unlikely to mean the difference between getting a mortgage or not, but it’s always a good idea to keep an eye on any inaccurate or excessive items. Occasionally, an administrative error can result in your history getting pulled twice or an unscrupulous lender may perform a hard pull without your consent. In these cases, contact the lender or institution that initiated the hard pull first and ask them to notify the pertinent credit reporting bureau that there was a mistake. If that doesn’t work, take your case directly to the credit reporting agency and possibly the FTC. And, as always, practice common sense when signing contracts and applying for loans and credit cards. If you use your head and follow the rules, you won’t rack up any undue black eyes on your credit history.

Related posts:

1. FICO vs. VantageScore and the Truth About Free Credit Scores
2. 15 ways to improve your Credit score (Part 1)
3. A Step-By-Step Guide to Getting Your (Actually) Free Credit Report without Accidentally Signing Up For Extras: Part Two – Experian
4. A Step-By-Step Guide to Getting Your (Actually) Free Credit Report without Accidentally Signing Up For Extras: Part One – TransUnion
5. 15 ways to improve your credit score!