Back in the heyday of the mortgage market when shady brokers were selling their socks off (which really wasn’t long ago now), they used the terms “soft” and “hard” credit inquiries when talking about pulling borrower’s credit scores. In fact, confusion about the difference between these types of inquiries was an easy thing for shady brokers to take advantage of. So, let’s dive into the different types of credit inquiries and how they affect your credit score.
Soft Vs Hard Inquiries
The terms “soft” and “hard” when referring to credit inquiry types aren’t exactly technical terms; instead, they’re industry jargon used to refer to two groupings of credit inquiries. Credit inquiries that do not show an intent to borrow money are not supposed to hurt your credit score. Account status checks by your current lenders and banks, pre-qualification credit checks for the purpose of sending credit card offers, and personal inquiries made by you through one of the many credit reporting agencies or credit monitoring services are all included in this category; industry jargon deems these credit inquiries “Soft” credit pulls.
“Hard” credit inquiries are those inquiries that do represent an intent to borrow money and will damage your credit score, if only slightly. We’ve covered the reasoning behind this in other articles about why credit inquiries affect your credit score in the past, but to put things into as simple terms possible, the day you decide to borrow more money, all else being equal, you become a greater credit risk. The reason for this is simple, the more money a person borrows, the more difficult it becomes to repay that money. So, by lowering your credit score just a bit each time you show intent to borrow money, the credit agencies are sort of, preemptively adjusting your credit score.
Can You Qualify for a Mortgage Using a Soft Inquiry?
Yes and No. Let’s rephrase that question. Can you get a true mortgage offer, Good Faith Estimate and all, using a soft credit inquiry? No. That said, I have given rough quotes based on soft inquiries before, and that’s perfectly ok, the problem with that in this day and age is, until you have an estimated settlement statement in front of you, you really don’t know what you’re getting or if the mortgage professional on the other end of the phone is being honest at all.
What About The Broker That Said He Uses “Soft Pulls” to Pre-Qualify Me?
Baloney. Mortgage companies don’t use soft pulls to protect your credit. If you give a company your social security number to prequalify you for a mortgage, they are going to run your credit and it’s going to be a hard pull. I’ve personally heard this line used before in an attempt to convince a borrower to fork over his or her social security number, but it’s absolute nonsense.
So How Can You Get a Quote With a Soft Pulled Credit Report?
You can get a preliminary quote with a credit report you pulled yourself. While a lot of the mortgage salesmen/women are taught to not give quotes before they have a real credit report, that’s really just a sales tactic; if you find an honest mortgage professional, he or she will give you a rough quote based on a credit report you pulled yourself.
How To Pull Your Own Credit Report
There are a few different resources where you can do this. All consumers are entitled to one free credit report per year, if you haven’t gotten a credit report in the past year, you can get one free at AnnualCreditReport.Com. If you’ve already pulled your one free credit report and would like to check it again, you can go to FreeCreditReport.Com. Now, here’s a little tip to help you out on this one. FreeCreditReport.Com gives you a free credit report as well as a 7-day free trial for their Triple Advantage Credit protection program. Now, this is a great program if you need credit monitoring, but if not, you can cancel within the 7 days and you keep your credit report for free. The only other option to getting a copy of your credit report is to buy one for $13-30 online, but why do that when you can get it free? A lot of companies try to make it nearly impossible to cancel the free trial so that you end up paying anyway, but FreeCreditReport.Com is run by Experian, one of the 3 major credit reporting agencies and is very legit. I’ve personally pulled my credit report there and canceled within the 7 days and it was no hassle at all. No cost to me whatsoever and I got a copy of my credit report.
Once you get your credit report, seek out an honest mortgage professional, and he or she should be more than happy to give you an idea what terms you could qualify for based on your free credit report.