Hard vs. Soft Credit Inquiries: How They Affect You and Your Applicants

When you rent your property to a tenant, they agree to pay you a certain amount of money in exchange for access to a living or working space. Rent is an obligation to pay money owed and, in this way, is just debt in another context. Understanding a renter’s history of paying past debts can indicate whether they will be able to pay the debt they owe to you. The most comprehensive, effective way to obtain this information is of course a credit report. But before you first start screening tenants and analyzing credit reports, you must understand and determine the method you’ll use to acquire your prospective tenant’s credit history. There are two types of inquiries: hard inquiries and soft inquiries (also called “pulls”). Some industries use only hard pulls and others use only soft, but landlords have the option of using either one. Therefore, understanding the differences and potential benefits of each can help you make the best screening decision for your business.
Hard Inquiries
What are hard inquiries and how are they run?
When someone applies for credit of some kind, whether in the form of a mortgage, auto loan, or credit card, the lender obtains your credit report via a hard inquiry. Each of these hard inquiries is recorded on the credit report itself and typically has a negative impact on the subject’s credit score. After all, if you had a tenant that applied for fifteen personal loans last year, you may have some concerns with their ability to manage m……