What is the difference between a hard and soft credit inquiry?

A hard inquiry occurs when a lender pulls your full credit report to make a lending decision. It can lower your score by 2–10 points and stays on your report for 2 years, though the scoring impact fades after 12 months. A soft inquiry occurs when you check your own credit or a company reviews your credit for pre-qualification purposes — it does NOT affect your score. When shopping for mortgage rates, multiple hard inquiries within a 14–45 day window are typically counted as a single inquiry by credit scoring models, so rate shopping does not heavily penalize your score.