The Difference Between Hard and Soft Credit Checks

Appfolio Websites • March 18, 2021

(from apartments.com /Author: Jacob Margle)

Credit checks are an important part of tenant screening and a best practice to ensure you put the best renters possible in your unit. By running a credit check on a prospective tenant, you can learn a great deal about their rental history, including whether or not they owe money to a previous landlord. No one wants to be put in a situation in which rent becomes backlogged. However, which kind of credit check you perform will tell you varying degrees of information. As a landlord, you’ll be faced with running either a hard or soft credit check and understanding the difference.

What Is a Hard Credit Inquiry?

A hard credit inquiry is what you can expect when applying for a credit card, a mortgage loan, or any other type of loan. Hard inquiries need to be performed with the permission of the tenant or applicant, and since it’s tied to a credit application, credit bureaus assume it’s tied to a new line of credit or a loan. This means that a hard credit inquiry will negatively impact the tenant’s credit score. Hard inquiries can also reveal a bit more information than a soft inquiry will, such as credit utilization rates and other factors that give you a more complete picture of a tenant’s credit history.

A hard credit inquiry should only decrease an applicant’s score by five points or so. It is important to note that this impact will stay on their credit report for about two years, so while the impact isn’t much, it is something the tenant will have to work with for at least two years.

Examples of a hard credit inquiry

Mortgage applications. Applying for a major loan for something like a mortgage will trigger a hard credit inquiry by the lender
Auto loans. Auto loans are another major loan people take out during their life. Like a mortgage, this will trigger a hard inquiry
Student loans
Credit card applications. Not a loan, but since this comes with the presumption that the applicant will have another line of credit, it necessitates a hard inquiry
Apartment rental applications

What Is a Soft Credit Inquiry?

A soft inquiry is named so because it makes virtually no impact on one’s credit score. Soft inquiries are requested by the applicant or tenant themselves, typically when viewing their own credit report. Because these types of inquires aren’t tied to a line of credit or loan, there’s no impact on one’s score.

Soft credit scores aren’t always requested by the consumer. Potential employers and landlords can view a soft credit inquiry with the permission of the applicant. This is advisable for landlords, since multiple hard credit inquiries have the potential to lower an applicant’s score more than once. Consider asking your potential tenants to send you a soft credit inquiry report rather than going the hard route.

Examples of a soft credit inquiry

Checking your own credit score. Companies like Credit Karma perform a soft inquiry.
Employer screenings. During a background check for a job, your potential employer may perform a soft credit inquiry.
Prequalified credit card applications
A current creditor checks your credit. Your credit card company or lender may perform a soft credit check at any point

Credit Inquiries Can Be Situational

Not every type of credit inquiry situation is clear cut. Some requests that would result in a soft inquiry the majority of the time can end up triggering a hard credit inquiry, and vice versa. When it comes to rental applications, whether your tenants will be subject to a hard or soft credit inquiry depends on what service you use.

Third-party screening companies almost always use hard inquiries, but dealing with an applicant directly can result in a soft credit inquiry.

Examples of situational inquiries

Renting a car. Reserving a rental car with a credit card can result in a soft inquiry, while reserving one with a debit card may result in a hard inquiry.
Opening a checking or savings account
Cell phone, TV, or internet service agreement
Utility service agreement

If You Choose a Hard Credit Inquiry…

If you decided to pull a hard inquiry on a prospective tenant, the tenant will have their credit score decrease by around five points. This impact will remain on their credit report for two years, and an accurate hard inquiry can’t be removed from a credit report. It’s also worth noting that most of the time, a series of hard inquiries (whether it be from rental applications or something else) will be counted as a single inquiry, but it’s not uncommon for each pull to affect an applicant’s score individually. The impact of a hard credit score also lessens over time, so renters won’t see as drastic of an impact as time goes on.

When you list your rental on Apartments.com, you get access to credit reports as part of Rental Tools, making pulling credit reports on tenants easy.

If You Choose a Soft Credit Inquiry…

Choosing a soft credit inquiry means you will have to work more closely with a tenant since they have to give you or the screening company permission to view their credit report. The benefit is that your applicants won’t have their score affected by the inquiry. If applicants know that you require a soft credit check up front, they may be more inclined to apply and you can enjoy a bigger pool of applicants. And if you reject a tenant, they won’t have taken as big of a credit score hit when they apply somewhere else.

The Choice Is Yours

Whether you decide to perform a hard or soft credit inquiry is up to you, just know how it impacts your potential tenants before you proceed. A hard inquiry will typically reveal more information about that person’s credit history, but they’ll take a small hit on their credit score. A soft inquiry won’t affect a tenant’s credit score, but it can slow down your screening process since you need the permission of each applicant to view a soft inquiry.

Remember that credit is only partial picture of a tenant, and that you can rent to tenants with bad credit. If you’re unsure, start with a soft credit check. For most tenants, a soft inquiry will give you a relatively complete picture and it’s a great way to start your landlord-tenant relationship off on a positive note.

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The Five-Year Rule for Home Price Perspective

By KCM • June 25, 2025

The Five-Year Rule for Home Price Perspective Headlines are saying home prices are starting to dip in some markets. And if you’re beginning to second guess your plans based on what you’re hearing in the media, here’s what you need to know. It's true that a few metros are seeing slight price drops. But don't let that overshadow this simple truth. Home values almost always go up over time (see graph below): While everyone remembers what happened around the housing crash of 2008, that was the exception – not the rule. It hadn’t happened before, and hasn’t since. There were many market dynamics that were drastically different back then, too. From relaxed lending standards to a lack of homeowner equity, and even a large oversupply of homes, it was very different from where the national housing market is today. So, every headline about prices slowing down, normalizing, or even dipping doesn’t need to trigger fear that another big crash is coming. Here’s something that explains why short-term dips usually aren’t a long-term deal-breaker. What’s the Five-Year Rule? In real estate, you might hear talk about the five-year rule. The idea is that if you plan to own your home for at least five years, short-term dips in prices usually don’t hurt you much. That’s because home values almost always go up in the long run. Even if prices drop a bit for a year or two, they tend to bounce back (and then some) over time. Take it from Lance Lambert, Co-Founder of ResiClub: “. . . there’s the ‘five-year rule of thumb’ in real estate—which suggests that most buyers can buffer themselves from mild short-term declines if they plan to own a property for at least that amount of time.” What’s Happening in Today’s Market? Here’s something else to put your mind at ease. Right now, most housing markets are still seeing home prices rise – just not as fast as they were a few years ago. But in the major metros where prices are starting to cool off a little (the red bars in the graph below), the average drop is only about -2.9% since April 2024. That’s not a major decline like we saw back in 2008. And when you look at the graph below, it’s clear that prices in most of those markets are up significantly compared to where they were five years ago (the blue bars). So, those homeowners are still ahead if they’ve been in their house for a few years or more (see graph below): The Big Picture Over the past 5 years, home prices have risen a staggering 55% , according to the Federal Housing Finance Agency (FHFA). So, a small short-term dip isn’t a significant loss. Even if your city is one where they’re down 2% or so, you’re still up far more than that. And if you break those 5-year gains down even further, using data from the FHFA, you’ll see home values are up in every single state over the last five years (see map below): That’s why it’s important not to stress too much about what’s happening this month, or even this year. If you’re in it for the long haul (and most homeowners are) your home is likely to grow in value over time. Bottom Line Yes, prices can shift in the short term. But history shows that home values almost always go up – especially if you live there for at least five years. So, whether you’re thinking of buying or selling, remember the five-year rule, and take comfort in the long view. When you think about where you want to be in five years, how does owning a home fit into that picture? Let’s connect to get you there.

Newly Built Homes May Be Less Expensive Than You Think

By KCM • June 25, 2025

Newly Built Homes May Be Less Expensive Than You Think Do you think a brand-new home means a bigger price tag? Think again. Right now, something unique is happening in the housing market. According to the Census and the National Association of Realtors (NAR), the median price of newly built homes is actually lower than the median price for existing homes (ones that have already been lived in): You read that right. That brand new, never-been-lived-in house may cost less than the one built 20 years ago in a neighborhood just down the street. So, if you wrote off a new build because you assumed they’d be financially out of reach, here’s what you should know. You could be missing out on some of the best options in today’s housing market. Why Are Newly Built Homes Less Expensive Right Now? 1. Builders Are Building Smaller Homes Builders know that buyers are struggling with affordability today. So, instead of building big houses that may not sell, they’re building smaller ones that will. According to the Census, the average size of a newly built single-family home has dropped considerably over the past few years (see graph below): And as size goes down, the price often does too. Smaller homes use fewer materials, which makes them less expensive to build. That helps builders keep prices lower so more people can afford them. 2. Builders Are Offering Price Cuts and Incentives In May, according to the National Association of Home Builders (NAHB), 34% of builders lowered their prices, with an average price drop of 5% . That’s because they want to be sure they’re selling the inventory they have before they build more. On top of that, 61% of builders also offered sales incentives – like helping with closing costs or buying down your mortgage rate. These are all ways builders are making their homes more affordable, so these homes sell in today’s market. Your Next Step? Ask Your Agent What's Available Near You If you're trying to buy a home right now, be sure to talk to your agent to find out what builders are doing in and around your area. They can find new home communities, as well as builders who are offering incentives or discounts, and hidden gems you might not uncover on your own. Plus, buying a newly built home often means there are different steps in the process than if you purchase a home that’s been lived in before. That’s why it’s so important to have your own agent who can explain the fine print. You want a pro in your corner to advocate for you, negotiate on your behalf, and make sure your best interests come first. Bottom Line You could get a home that’s brand new, with modern features, at a price that’s even lower than some older homes. Let’s talk about what you’re looking for and see if a newly built home is the right fit for you. If buying a home is on your to-do list, what would stop you from exploring newly built options?

Why Would I Move with a 3% Mortgage Rate?

By KCM • June 18, 2025

Why Would I Move with a 3% Mortgage Rate? If you have a 3% mortgage rate, you’re probably pretty hesitant to let that go. And even if you’ve toyed with the idea of moving, this nagging thought may be holding you back: “why would I give that up?” But when you ask that question, you may be putting your needs on the back burner without realizing it. Most people don’t move because of their mortgage rate. They move because they want or need to. So, let’s flip the script and ask this instead: What are the chances you’ll still be in your current house 5 years from now? Think about your life for a moment. Picture what the next few years will hold. Are you planning on growing your family? Do you have adult children about to move out? Is retirement on the horizon? Are you already bursting at the seams? If nothing’s going to change, and you love where you are, staying put might make perfect sense. But if there’s even a slight chance a move is coming, even if it’s not immediate, it’s worth thinking about your timeline. Because even a year or two can make a big difference in what your next home might cost you. What the Experts Say About Home Prices over the Next 5 Years Each quarter, Fannie Mae asks more than 100 housing market experts to weigh in on where they project home prices are headed. And the consensus is clear. Home prices are expected to rise through at least 2029 (see graph below): While those projections aren’t calling for big increases each year, it's still an increase. And sure, some markets may see flatter prices or slower growth, or even slight dips in the short term. But look further out. In the long run, prices almost always rise. And over the next 5 years, the anticipated increase – however slight – will add up fast. Here’s an example. Let's say you'll be looking to buy a roughly $400,000 house when you move. If you wait and move 5 years from now, based on these expert projections, it could cost nearly $80,000 more than it would now (see graph below): That means the longer you wait, the more your future home will cost you. If you know a move is likely in your future, it may make sense to really think about your timeline. You certainly don't have to move now. But financially, it may still be worth having a conversation about your options before prices inch higher. Because while rates are expected to come down, it’s not by much. And if you’re holding out in hopes we’ll see the return of 3% rates, experts agree it’s just not in the cards (see graph below): So, the question really isn’t: “why would I move?” It’s: “when should I?” – because when you see the real numbers, waiting may not be the savings strategy you thought it was. And that’s the best conversation you can have with your trusted agent right now. Bottom Line Keeping that low mortgage rate is smart – until it starts holding you back. If a move is likely on the horizon for you, even if it’s a few years down the line, it’s worth thinking through the numbers now, so you can plan ahead. What other price point do you want to see these numbers for? Let’s have that conversation, so I can show you how the math adds up. That way, you can make an informed decision about your timeline.