A credit inquiry, request, or “pull,” occurs when a third party orders a credit report or rating on an individual consumer or company. The hard pull is the standard method used by many lenders, creditors, loan brokers and institutions to request and receive credit history data for individuals
In the consumer loan industry, credit inquiries are sometimes labeled as either soft pulls or hard pulls. Although the same lender may use both types of pulls, a soft credit inquiry and hard credit inquiry have important differences that directly affect the consumers whose credit data is being reviewed:
Hard pull inquiries normally take place whenever a company or entity obtains credit data from a credit reporting agency or bureau about an individual. Per the Fair Credit Reporting Act, the business or third-party obtaining a credit report must have a legitimate reason for receiving and viewing a person’s credit report.
Most hard credit inquiries today are ordered and received electronically. Lenders, landlords, employers and even government entities can order credit reports from a credit bureau online. The credit bureau then provides the party ordering the hard pull with a credit report on the affected individual.
When a hard inquiry is processed, the credit reporting agency will record an inquiry in the individual’s credit history. Individuals who use a credit alert service will often receive immediate notice from that service whenever any entity or third party runs a hard credit inquiry.
The result of a hard credit pull is the borrower’s credit history with the credit bureau providing the report.
Because hard credit inquiries become part of a person’s credit record, credit scoring systems will normally factor hard inquiries when calculating credit scores. Here’s how most hard inquiries will affect consumer credit scores:
Lenders, creditors and other credit report users need very little information to conduct a hard pull on an individual’s credit history. In fact, contrary to what many believe, a social security number isn’t even required to run a hard pull. The ordering party and credit bureau just needs the name and enough identifying information to accurately match a credit report to the subject person.
For example, it’s sometimes enough to just have the person’s name along with either the current home address or date of birth to run a hard credit pull. If that information is enough to properly identify one person’s credit record, the credit bureau can provide a credit report – without a social security number.
Having said that most lenders and creditors often collect the following information so as to improve their chances of obtaining a properly matched credit report for a potential borrower:
That last requirement is perhaps the most important, from a legal and liability perspective, for most lenders and creditors. They must have the borrower’s authorization in order to run a hard pull, as federal laws restrict who can access a person’s credit reporting data.
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