Understanding how your credit is checked can shape the outcome of your next loan application. Whether you’re applying for your first personal loan, exploring short-term solutions, or repairing your financial footing, knowing the ins and outs of soft and hard credit checks puts you in control.
This guide walks you through what each type of credit check means, when they occur, how long they last, and what you can do to protect your credit score while still getting the funds you need. It’s not about saying “no” to borrowing, it’s about knowing how to borrow smarter, with less risk to your credit profile.
Credit Checks, Explained Clearly
A credit check, or credit inquiry, is a request to access your credit file. Lenders, landlords, insurers, employers, and even you can perform one. But there’s a big difference between soft and hard credit checks, and that difference can affect your financial opportunities.
- Soft credit checks are used for background checks, pre-qualifications, or when you check your own credit. They don’t impact your score and are only visible to you.
- Hard credit checks happen when a financial institution makes a formal decision about lending you money. These inquiries do impact your score and are visible to other lenders.
Understanding this distinction can help you apply for a loan without hurting your credit, especially if you’re building or rebuilding your credit profile.
What Makes a Check “Soft” or “Hard”?
The primary differences between soft and hard checks come down to timing, visibility, and impact.
| Feature | Soft Credit Check | Hard Credit Check |
| Permission required? | Not always | Yes |
| Shown to lenders? | No | Yes |
| Affects credit score? | No | Yes (minor, short-term effect) |
| Common scenarios | Pre-approvals, background checks | Loan, credit card, or mortgage apps |
| Visible on credit report? | Only to you | Visible to all lenders |
| Duration on report | Not listed for lenders | Up to 2 years (can vary) |
If you’ve ever wondered do soft credit checks affect your score, the answer is no. They’re harmless from a credit impact standpoint. But if a lender needs to make a decision based on your ability to repay a loan, expect a hard check.
Hard Inquiries and Credit Score Impact
Every hard inquiry can decrease your credit score by roughly five points of less. That might seem minor, but it matters if you’re hovering between score categories (for example, 669 to 660 can push you from “fair” to “poor”).
While the inquiry remains on your report for three years, credit scoring models usually stop factoring it into your score after 12 months. This short-term dip can affect your ability to access the best rates and terms, especially if you have multiple inquiries in a short period.
Grouping similar loan applications (like mortgages or auto loans) within a 14-45 day window can help mitigate the impact, as most scoring models will treat these as a single inquiry. But if you’re applying for different types of credit at different times, say, a line of credit in January and a credit card in March, each one may count separately.
Knowing when do lenders do a hard credit check is essential to avoid surprise hits to your score. Just as importantly, knowing how to avoid hard credit checks when exploring your options, by asking the right questions or using soft-check pre-qualification tools, can help you safeguard your score while still moving forward with your financial goals. Typically, lenders perform hard pulls during the final stages of approval, after you’ve submitted a full application.
When Will a Credit Check Happen?
Understanding when a credit check might occur allows you to plan accordingly. Here’s a breakdown of the most common examples:
Soft Credit Check Examples:
- Checking your own credit report or score
- Getting pre-qualified for a personal loan or credit card
- Receiving promotional credit card offers
- Employment or volunteer background screening
- Requesting a quote for home, life, or car insurance
- Applying for an apartment rental
Hard Credit Check Examples:
- Applying for a mortgage, car loan, or personal loan
- Submitting a full credit card application
- Requesting a credit limit increase with your bank
- Accepting a loan offer after pre-qualification
If a company is evaluating your eligibility for a product or service without offering credit (like insurance or rental housing), a soft check is most likely. But when you’re asking for actual funds, the inquiry is typically hard.
Permission and Privacy: What Lenders Must Tell You
Canadian privacy law requires lenders to obtain your explicit consent before conducting a hard inquiry. This typically happens when you fill out an application form or check a box online giving permission. That said, consent alone doesn’t always mean clarity, so it’s wise to ask how your information will be used.
Soft checks, on the other hand, may not require consent in every case, such as when a company is making a promotional offer based on pre-screened credit data.
To protect your privacy:
- Always ask if a credit check will be soft or hard
- Review application terms before agreeing
- Choose lenders like GoDay who clearly explain how your credit will be evaluated
This ensures transparency from start to finish and helps you avoid unwanted surprises.
Clearing Up the Confusion: Common Misconceptions
There are plenty of misunderstandings around credit checks. Let’s clear up a few of the most common:
Myth #1: All credit checks damage your score.
Only hard inquiries affect your credit, and even then, the effect is usually small and short-lived. One or two inquiries spaced out over time won’t derail your score.
Myth #2: Checking your own credit score hurts you.
This is false. Checking your own score is a soft inquiry, it doesn’t impact your score and is a recommended habit for anyone monitoring their credit.
Myth #3: Hard inquiries automatically lead to denial.
Not true. Lenders evaluate multiple factors, including income, credit history, and debt-to-income ratio. A few inquiries won’t outweigh an otherwise strong application.
Myth #4: Soft checks are irrelevant.
Not at all. Soft checks are often the first step in determining eligibility, especially for pre-qualified offers or when lenders assess basic affordability without affecting your score.
Credit: tolgart from Getty Images Signature
Smart Strategies to Minimize Hard Pulls
If you want to be credit-savvy, use these steps to minimize unnecessary hard credit checks:
- Use soft-check tools for pre-qualification. Many lenders offer these to help you gauge eligibility before committing to a full application.
- Group similar applications together. When rate shopping, keep all applications within a two-week period to avoid multiple hits to your score.
- Only apply when ready. Limit “just curious” applications. If you’re not serious, wait.
- Ask first. Before you submit, confirm with the lender whether they’ll perform a hard or soft check.
Looking into loans for bad credit in Canada? Focus on lenders who are clear about their process, offer alternative approval criteria, and are willing to help you move forward responsibly.
Long-Term Credit Health: It’s a Strategy
Hard inquiries make up just 10% of your credit score. The bigger contributors are:
- Payment history (35%)
- Credit utilization (30%)
- Length of credit history (15%)
- Types of credit used (10%)
So while it’s important to avoid stacking too many hard inquiries at once, it’s not the whole picture. One or two hard pulls won’t do lasting damage—especially if you’re paying bills on time and keeping balances low. Over time, your credit behavior matters more than any single inquiry.
Low-Impact Loans: How to Borrow Smarter
If you’re hoping to apply for a loan without hurting your credit, here’s what to look for:
- Pre-qualification or soft-check options. These help you see what you might qualify for without affecting your score.
- Transparent approval process. Reputable lenders make it clear when a credit check will be performed and what kind.
- Flexible qualification criteria. For short term loan options, some lenders will consider income stability, employment, and banking history alongside (or instead of) credit reports.
GoDay is one of those lenders. We prioritize transparency, speed, and responsible lending, helping you find credit solutions that work with your goals, not against your credit score.
FAQ: Real Answers for Real Concerns
How many hard inquiries is too many?
More than 4-6 in a short period may signal to lenders that you’re overextending yourself. Spacing out your applications over time can prevent negative assumptions and protect your score. Always weigh the importance of each application before submitting.
Do soft inquiries show up on my credit report?
Yes, but only you can see them. Lenders don’t consider soft inquiries when reviewing your credit application. They’re visible as a helpful way to track activity and ensure you recognize every pull on your report.
Can I remove a hard inquiry from my report?
Only if it’s inaccurate or unauthorized. If you notice a hard inquiry you didn’t approve, file a dispute with Equifax or TransUnion. If approved, it can be removed from your file. Legitimate inquiries, though, must remain until they expire.
What should I ask a lender before applying?
Ask whether the inquiry will be soft or hard, which credit bureau will be checked, and what other factors determine approval. If the lender can’t answer clearly, that’s a red flag.
Your Credit, Your Confidence
Credit inquiries don’t have to be confusing. When you understand how and why credit checks happen and how to navigate them, you stay one step ahead.
Whether you’re building credit for the first time or weighing short term loan options, staying informed gives you leverage. And with lenders like GoDay, you can explore responsible, flexible lending options that support, not sabotage, your financial progress.
