When submitting a loan application, as well as applying for a lines of credit--including credit cards or a mortgage--there is typically a credit inquiry performed. The lenders want to evaluate your credit history in order to offer you terms on the loan request and to approve credit.  The level of inquiry depends on the lending situation and there are two typical specifications of inquiry.  It's important to know the difference in order to protect your credit.

Soft Credit Pulls

A soft credit pull, also known as a soft inquiry, is a type of credit inquiry that does not affect your credit score.

Soft credit pulls are typically used for background checks, pre-approval offers, and other non-credit related purposes. Examples of soft credit pulls include checking your own credit score, pre-screened credit card offers, and employer background checks. Here at BankHunter, when you submit a loan application, we perform a soft inquiry to verify details about your credit so that we can match you with the best lenders for your car loan. 

Lenders all have buying guidelines--think Match.com--and they vary drastically, and change frequently.  BankHunter is your best resource for finding the lender because you won't otherwise know what each potential lender is offering.  The soft credit pull won't impact your credit, and there is an added benefit: fewer credit inquiries.  BankHunter immediately sources your best lender options, which minimizes the number of credit inquiries from the banks, which will be hard credit pulls.

Hard Credit Pulls

A hard credit pull, also known as a hard inquiry, is a type of credit inquiry that will impact your credit score. Hard credit pulls occur only when a lender or creditor checks your credit report in order to make a decision about whether to extend credit to you.

Each hard credit pull can lower your credit score by a few points, and they can stay on your credit report for up to two years.  Remember, lenders may only look at one credit bureau score, and your score from one bureau to another will typically vary.  Therefore, protecting your score overall is important.  When your score drops on a bureau, it can effect the type of loan programs you have access to, because the lenders have specific thresholds for certain loan terms.  Fall below them and you could see your interest rate go up significantly. 

It's important to note that when you apply for a loan or credit card, the lender will typically perform a hard credit pull in order to assess your creditworthiness. Multiple hard credit pulls within a short period of time can have a significant impact on your credit score, as they may suggest that you are applying for credit excessively and could be a high-risk borrower.  

Protect Your Credit

The average car buyer visits 3 dealerships.  If you're unsure as to whether you want a Toyota, a Hyundai, or Nissan--for example--submitting a credit application at each dealership, multiplied by the number of lenders to which the dealer submits your application, can lead to excessive credit inquiries.  On average, an application sorted through BankHunter will result in 75% fewer credit inquiries.  This is a solid way to protect your credit while sourcing the best loan.

It is important to educate yourself first on the best options for a lender.  That's why BankHunter exists.  It saves you hours if not days of your valuable time, as well as potentially thousands of dollars in up charges.  Add to this the ability to avoid discriminatory lending, and know that you had a platform in your corner, working for you.

When it comes to pulling credit, BankHunter helps you minimize the hits to your credit, thereby helping you to protect your own credit with excessive, costly credit inquiries.

Happy BankHunting!