Blog

Consumer Litigation Associates
“Understanding Your Rights: Hard vs. Soft Credit Pulls”
Estimated Read Time
≈ 9 minutes

Credit reports often list every time someone checked your credit in the past two years, but not all credit inquiries are created equal. There’s a lot of confusion around “hard” vs. “soft” inquiries – and plenty of myths that might scare you away from checking your credit or shopping for a loan. In this MythBusters-style quiz, we’ll tackle 5 common myths about credit inquiries. True or False? Read on to find out – and learn about your rights under the Fair Credit Reporting Act (FCRA), including the permissible purpose rule (15 U.S.C. § 1681b), opt-out rights, dispute procedures (15 U.S.C. § 1681i), and even when you might have a legal claim (15 U.S.C. § 1681n). Let’s bust some myths!

Myth #1: “Insurance quotes or other non-credit checks hurt your score.” (True or False?)

False. Getting an insurance quote or having a landlord or employer peek at your credit report will not hurt your credit score. These kinds of checks are known as “soft inquiries,” and they have zero impact on your FICO or VantageScore credit scores. Soft inquiries occur outside of a lending decision – for example, when an insurance company checks your credit-based insurance score, when you get pre-approved credit card offers in the mail, or when you check your own credit. Unlike hard inquiries (which happen when you apply for a loan or credit card), soft inquiries are only visible to you on a personal credit report pull and don’t factor into any scoring model. In fact, the FTC confirms that prescreened credit offer inquiries won’t hurt your score. So whether you’re comparing insurance rates or reviewing your own credit report, rest easy – those activities do not lower your credit score. Just remember that even soft inquiries must serve a “permissible purpose” under the FCRA (for instance, an insurer checking your credit for underwriting is allowed, but random businesses can’t just pull your report without reason). Bottom line: Soft inquiries = no score damage, ever.

Myth #2: “A single hard inquiry will drastically lower your credit score.”

False. A lone hard inquiry (the kind that happens when you apply for new credit) typically has a minor and temporary effect on your score – not a drastic one. Credit scoring companies like FICO and VantageScore generally dock only a few points for one additional inquiry. For example, Experian notes that one new hard inquiry usually lowers a FICO® Score by less than 5 points, and around 5–10 points for a VantageScore. Inquiries have a relatively small weighting in your overall score, compared to factors like payment history or credit utilization. Plus, any small hit from a hard pull is short-lived – FICO ignores inquiries older than 12 months, and hard inquiries automatically drop off your credit report after two years. So, one credit card or loan application is not going to tank an otherwise healthy credit score. Of course, multiple hard inquiries in a short period can add up (more on that next), but if your credit profile is solid, you likely won’t even notice the single inquiry’s dip after a few months. The FCRA’s permissible purpose standard (15 U.S.C. § 1681b) also means hard inquiries occur only when you’ve initiated credit (or a similar legitimate purpose), so you won’t get surprise hard pulls out of nowhere. Myth busted: one hard inquiry is a minor bruise, not a broken bone for your credit score.

Myth #3: “Shopping around for the best loan will wreck your score with multiple inquiries.”

False – if done correctly, rate shopping shouldn’t wreck your score. Credit scoring models understand that consumers shop around for major loans. If you apply for several mortgages or auto loans in a short time frame, those multiple pulls are usually treated as one inquiry for scoring purposes. For instance, the newest FICO® Scores give you a 30-day buffer – any auto, mortgage, or student loan inquiries within 30 days are ignored entirely. Even beyond 30 days, FICO groups together all such inquiries made within a 45-day window and counts them as a single event. (Older FICO versions use a 14-day window, but most lenders use newer versions.) VantageScore is similar: it combines all inquiries within a 14-day period (regardless of loan type) into one, and considers hard inquiries over a full 24-month period for scoring. The upshot: smart rate shopping won’t significantly hurt your score. To be safe, cluster your loan applications in a short span (e.g. within two weeks) so they’ll fall under the deduplication window. Also, you can often get pre-qualified with only a soft pull, allowing you to compare rates before a hard inquiry ever happens. The FCRA explicitly permits credit checks for “bona fide” credit offers (like when you’re seeking a loan), so don’t fear using your rights to shop for the best deal. In summary, don’t let the myth of “rate shopping ruin” deter you – being an informed consumer by comparing offers is both allowed and encouraged, and scoring systems have your back on this one.

Myth #4: “Anyone can pull your credit report without you knowing.”

False. The FCRA requires that anyone who obtains your credit report must have a permissible purpose (15 U.S.C. § 1681b), and many types of inquiries actually require your consent. Inquiries are recorded on your report only when your information is accessed by a legally authorized person or organization. So, random strangers or businesses cannot just peek at your credit file for no reason – if they do, they’re breaking the law. Hard inquiries (like when you apply for credit) always involve your explicit permission as part of the application. Soft inquiries (like preapproved offers or account reviews) may occur without your direct consent, but they still must meet one of the FCRA’s permitted purposes. For example, employers can pull your credit report only with your written permission and after giving you a clear disclosure (15 U.S.C. § 1681b(b)). Landlords and utility companies need a valid purpose (e.g. screening you as a tenant or customer) – typically you’ve initiated that transaction or agreed to a check. If someone does obtain your report without a permissible purpose, that’s a serious FCRA violation. You have the right to dispute unauthorized inquiries and have them removed (more on disputes in a moment), and you could even be entitled to damages if a company willfully pulled your report illegally (15 U.S.C. § 1681n). The bottom line is your credit report isn’t an open book to the world: the law protects your privacy. Every legitimate inquiry on your report will usually correspond to an action you took (credit application, insurance quote, etc.) or an allowed preview (like a firm offer of credit). If you don’t recognize an inquiry, you absolutely have the right to question it. Your credit is your business – access is restricted and regulated, not a free-for-all.

Myth #5: “You can’t do anything about credit inquiries (or those pre-approved offers).”

False. You have more control and protections regarding credit inquiries than you might think. First, if you’re tired of unsolicited “pre-approved” credit card or insurance offers filling your mailbox (and the soft inquiries that come with them), you can opt out of prescreened offers. The FCRA gives you the right to stop credit bureaus from sharing your information for firm offers of credit or insurance, and the major bureaus operate a one-stop website and phone line for this. By visiting OptOutPrescreen.com or calling 1-888-5-OPT-OUT, you can remove your name from promotional lists for five years or even permanently. It’s free and FCRA-authorized – in other words, you can shut off those promotional inquiries if you don’t want them.

Secondly, if you discover a hard inquiry you never authorized, you have the right to take action. Start by checking your credit reports from all three bureaus (you can get them for free at AnnualCreditReport.com). Identify any inquiry that looks suspicious. Remember, inquiries are listed by the business name (which might be a parent company or an abbreviation), so make sure it truly appears fraudulent or erroneous. If it still doesn’t ring a bell, dispute it with the credit bureau that’s reporting it. Under FCRA § 611 (15 U.S.C. § 1681i), you can file a dispute for any inaccurate information – and the bureau must investigate and remove unverifiable or unauthorized data. Experian explicitly notes: “If you find an inquiry you don’t recognize, you have the right to dispute it with the credit bureau.” This dispute process is usually straightforward (you should do it by mail), and it’s free.

If an inquiry was truly made without a permissible purpose – say, a lender pulled your report by mistake or a shady debt collector accessed it without proper reason – that’s not only removable through a dispute, but it could also be a legal violation. The FCRA allows consumers to seek damages for willful non-compliance (15 U.S.C. § 1681n), so you may have recourse to sue the party that obtained your report improperly. (For instance, our firm has seen cases where unauthorized pulls led to settlements for the consumer.) And if multiple unauthorized inquiries or accounts suggest identity theft, you have additional rights under the FCRA and identity theft laws to block fraudulent information and get help from the bureaus and creditors (see our Identity Theft page for more on that).

Bottom line: You are not helpless when it comes to credit inquiries. You can opt out of junk-mail credit offers, you can dispute and remove illegitimate inquiries, and you can hold bad actors accountable. Stay proactive: check your reports regularly so you know who’s been looking at your credit. If something looks wrong, take action – you have the tools and rights to fix it.

Think there’s an error? Call Consumer Litigation Associates at (757) 930-3660 or Contact Us Here » We’ve got your back in defending your credit rights.

• Fair Credit Reporting Act, 15 U.S.C. § 1681b (permissible purposes of consumer reports).
• Fair Credit Reporting Act, 15 U.S.C. § 1681b(b) (conditions on furnishing for employment purposes).
• Fair Credit Reporting Act, 15 U.S.C. § 1681i (procedure in case of disputed accuracy).
• Fair Credit Reporting Act, 15 U.S.C. § 1681n (civil liability for willful noncompliance).
• Federal Trade Commission, What To Know About Prescreened Offers for Credit and Insurance (Oct. 2022)consumer.ftc.govoptoutprescreen.com.
• Federal Trade Commission, Disputing Errors on Your Credit Reports (Jan. 2020)experian.com
• Experian, Hard Inquiry vs. Soft Inquiry: What’s the Difference? (Oct. 28, 2024)experian.comexperian.com.
• Experian, Do Multiple Loan Inquiries Affect Your Credit Score? (Aug. 30, 2024)carecredit.comcarecredit.com
• Experian, Can Credit Repair Companies Remove Hard Inquiries? (Jan. 13, 2024)experian.comexperian.com.
• CareCredit, What Are Credit Inquiries and How Do They Impact Your Credit? (May 17, 2023)carecredit.comcarecredit.com.

Legal Disclaimer: This blog post is for educational purposes only and does not constitute legal advice. Every case is different, and past results do not guarantee future outcomes. If you have questions about your specific situation, contact Consumer Litigation Associates for more information or assistance (757) 930-3660.