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What’s the difference between Hard and Soft Credit Inquiries?

January 31, 2022 by Gary Stockton

What’s the difference between Hard and Soft Credit Inquiries?

In this Business Credit Answer we’ll explain the difference between Hard and Soft credit inquiries.

Let’s start with the inquiry its self. An inquiry occurs when your commercial credit is reviewed for decision monitoring or to provide an invitation to apply for credit or service. There are two types of inquiry, soft and hard. The names are representative of the impact to your commercial credit score. A soft inquiry happens when you or someone you authorize reviews your credit report and your business is not seeking credit. Still, the performance of your business is being monitored or reviewed.

Here’s an example, a commercial credit issuer, a trade creditor may check your credit to pre-select you for an offer, or they may just be monitoring your business credit for health of your business. Soft inquiries don’t impact your credit score because they aren’t attached to a specific application for credit. You can have dozens, even hundreds of soft inquiries in your credit report, and they still don’t impact your score.

A hard inquiry on the other hand occurs when you are applying for commercial credit or service, and your credit information facilitates that credit decision. A hard inquiry can stay on your credit report for up to two years, but they play a minor role in your score and the fear of a hard inquiry shouldn’t keep you from applying for credit.

When you need to open a new account, an inquiry indicates that your business is in the market for credit. Inquiry, volume and velocity on your credit report helps to monitor your business for fraudulent activity or alert creditors that you might be seeking some additional funding and even give them a heads up.

That’s the difference between Hard and Soft credit inquiries.

You can check your Experian Business Credit Score by purchasing a one-time copy of your credit report, or by signing up for business credit monitoring, including unlimited access to scores. Read our post on checking your business credit score for more information.

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This blog is written and managed by the team at Experian Business Information Services. Here you will find articles on business advice and credit education in addition to the latest news and trends in small business.

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