How Credit Checks Impact Your FICO Score

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Not all credit inquiries are created equal. Here's a detailed breakdown of how different credit checks affect your score.

Do you cringe at the thought of your credit score taking a hit each time your profile is accessed for review?

Fortunately, not all inquiries have the ability to affect your score. In fact, the impact varies by the type of pull along with the individual’s credit history.

Hard vs. soft inquiries

Soft inquiries are internal pulls that are not reviewed by a prospective lender. These include reports accessed for your own personal records, credit monitoring and for preapproved credit card offers for lenders. Because they are not associated with a particular application for credit, soft inquiries have no impact on your credit score.

On the other hand, hard inquiries are the result of volunteer applications for credit. They do impact your credit, but the decrease in points is minimal and depends on your particular credit profile.

Consider also that landlords, utilities and cellphone companies may perform either a hard or soft pull on your credit history. Ask what their policy is.

At this point, you may be wondering why lenders that run hard pulls are so concerned with your credit. Well, a significant number of hard inquiries on your credit report, particularly in a brief period of time, could indicate that you are high-risk because you are having financial difficulties.

Fortunately, applications for new credit account for only 10 percent of your FICO credit score, and inquiries remain on your credit reports for at least one year, but no more than two. A FICO score is the credit score most commonly used by lenders.

Let’s take a closer look at some more common scenarios and how they affect your credit score.

1. Searching for the best rate

In the market for a new car or home or student loan, and exploring your loan options from a number of lenders? This practice is known as rate shopping. Here’s what myFICO says about them:

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score.

Note that the rule applies only to mortgage, car and student loans. If you apply for other types of loans like credit cards, each pull will show up individually, and multiple ones would do more damage to your credit score.

2. Employment credit screenings

When an employer checks your credit history, an inquiry is added to your credit report. But that inquiry will not be visible to other employers, and has no bearing on your credit score.

Also, it’s your credit history that employers are concerned with, not your actual score.

3. Applications for car or homeowners insurance

Unlike employers, insurance companies don’t need your permission to look at your credit reports. Under the the Fair Credit Reporting Act, insurance companies have a “permissible purpose” to review your credit files.

They use certain information from your credit history to help determine the premiums you pay. What information is considered varies from state to state.

Again, this is a soft inquiry and won’t affect your credit score.

4. Car rentals

If you decide to rent a car using a debit card, the company may run your credit in addition to collecting a hefty deposit and making you complete a mountain of paperwork. Reasoning?

According to

For rental car companies, customers who choose to pay with a debit card or cash pose a credit risk. These companies could end up on the losing side of the equation if damages are sustained to the vehicle during the rental period and they have no means to collect funds to cover repairs. As a result, they will more than likely screen your credit and require some form of deposit, which typically ranges from $200 to $500, to proceed with the transaction.

Often the car rental companies do a hard pull on your credit, although you could ask them to do a soft pull instead.

5. What happens when I check my own credit?

As I mentioned before, pulling your own credit report or retrieving it through a credit monitoring service has no bearing on your credit score.

6. Promotional pulls

Have you been receiving an outrageous number of unsolicited credit card offers in the mail? The reasoning is simple: You were placed on a list of consumers who fit the criteria for the applicants the issuer is most likely to approve. And to make this determination, your credit profile was accessed. However, the pull was soft and won’t have any impact on your credit score.

Getting fed up with the junk mail? Visit or contact companies and credit bureaus directly to be removed from lists.

Next time you are required to undergo a credit screening, whether voluntary or involuntary, you will now be aware of the potential effect on your score.

Stacy Johnson

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