The terms “hard pull” or “soft pull” sound like sports jargon, but they do relate to personal credit. Specifically, they distinguish between two types of inquiries into one’s credit report, so they’re called “hard inquiries” and “soft inquiries” as well. What is this difference and when does it matter to New York bankruptcy debtors?
The simple explanation is that hard pulls are debtor-consented and will reduce credit scores. Soft pulls don’t always require the debtor’s consent but they never reduce credit scores.
More specifically, a “soft pull” is an inquiry that’s informational only and not related to taking out a debt. The most common type of soft pull is the kind that people are most familiar with: obtaining their own credit reports.
Any time you’ve received a mailer from a bank saying that you’ve been preapproved for a credit-card, that’s a soft pull. There’s no way the lender could’ve known about your creditworthiness without doing some kind of research first. Employers can also check potential employees’ credit, but they see a limited report to comply with employment-discrimination laws. For instance the report won’t include a date of birth to prevent age discrimination. (Click here to read about New York City’s decision to ban credit checks for job candidates.) Insurance companies will also make soft inquiries on people’s credit scores.
Another important distinguishing characteristic of soft pulls is that a third party that initiates one will not see the person’s credit score or account numbers. All it consists of is a list of debt balances and repayment histories.
Hard pulls are central to credit scores. Lenders use them to determine if consumers are creditworthy, but they will require your consent before doing so. Hard pulls reduce credit scores and remain on credit reports for up to two years. There is usually a grace period, often between 14 and 45 days depending on the credit-reporting agency that prevents multiple hard pulls in a short period from significantly reducing a credit score. The idea is to allow people to shop around for credit without seriously damaging it. Hard pulls made during the grace period will only appear once on a person’s credit score.
Landlords frequently ask potential tenants if they can draw credit reports. These are usually hard pulls but in recent years the credit reporting agencies have created programs to make these soft pulls because they’re more like employer credit checks than loan applications.
The actual effect of a hard pull on a credit score is modest, and the other primary components of a credit score are more substantial. The reason hard pulls reduce credit scores is that lenders want to keep an eye out for consumers who intend to borrow a lot of money and not repay it. For typical consumers though, it won’t be that significant of an impact.
New York bankruptcy debtors should be aware of the distinction between hard pulls and soft pulls mainly to maintain a healthy credit score. Bankruptcy debtors usually see their credit scores rise after bankruptcy. The difference can also help debtors who believe they are victims of identity theft. If the thieves made credit requests, debtors can challenge these.
Credit isn’t the most important thing debtors should be concerned about. If you are facing serious financial difficulties, then talking to an experienced New York bankruptcy lawyer can help you assess your options.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney Brooklyn NY Bruce Weiner for a free initial consultation.
