Summary

Understanding the difference between a soft and hard credit pull is helpful when navigating the mortgage application process. Each type of credit inquiry serves a different purpose and has distinct implications for your credit score.

What is a Credit Report?

A credit report is a detailed record of credit history and financial behavior compiled by credit bureaus. It includes information about your credit accounts, such as loans, credit cards, and mortgages, as well as your payment history, outstanding balances, and the length of your credit history. The report also lists any public records, like bankruptcies or tax liens, and any recent credit inquiries made by lenders.

Soft Credit Pull

A soft credit pull is a preliminary check of your credit report performed during pre-qualification. It provides a snapshot of your creditworthiness without impacting your credit score. Lenders use soft pulls to gauge your financial health and assess your eligibility for a mortgage, helping both parties understand whether you qualify for a loan and what terms might be available.

Hard Credit Pull

On the other hand, a hard credit pull is a more thorough examination of your credit history. This occurs later in the mortgage application process before pre-approval or submission to underwriting. Unlike a soft pull, a hard credit pull can affect your credit score slightly because it signals that you are actively seeking credit. Lenders use this detailed report to make final lending decisions, ensuring they have a comprehensive view of your financial obligations and repayment history.