Three Things That Trigger a Hard Credit Inquiry

If your New Year’s resolution is to improve your credit, then you’re probably wondering which activities trigger a soft or hard credit inquiry. An inquiry will appear on your credit report when a someone inquires about your credit. Also known as a credit check, there are two types: a “hard” pull (this affects your credit score), and a “soft” pull (this does not affect your score).

Whenever you authorize a lender to view your credit reports and scores, this will trigger a hard inquiry. MyFico says hard inquires can impact your credit scores because this is an indication that you’re seeking new credit. Research finds that consumers looking for new credit are more risky than those who are not.

On the other hand, a soft inquiry happens when you pull your own credit or a creditor pulls your credit in order to conduct a pre-approval or account review.  This will not impact your score because it does not signify that you’re looking for new credit.

MyFico lists three actions that trigger a hard inquiry:

Getting a new cell phone. Your credit report will often be checked by cell phone providers before they approve you for a contract. This is a way for them to take stock of your level of your risk. Lenders want to measure the likelihood that you will pay your cell phone bill in a timely manner.

Asking for a credit line increase. Sometimes a credit card company will offer a credit limit increase. Some creditors will first check your credit to see if your credit standing still aligns with their requirements. MyFico says if a credit card company conducts the inquiry without your knowledge, it’s considered a soft inquiry. However, if you initiate the credit limit increase, the credit check would be considered a hard inquiry.

Obtaining a business credit card. Your company might offer you a corporate credit card so that you can pay for business expenses.  However, for some corporate credit cards a personal guarantee is required. This is a way for the lender to ensure you have the ability to pay your bills on time if you were ever to incur expenses not covered by the company.  MyFico says this type of corporate card will inquire about your credit before you’re approved, which will result in a hard inquiry.

For more on this topic, see Five Factors That Affect Your Credit Score.