Software vs Hardwre overclocking

Software overclocking has 2 main problems:

1_It doesnt have alot of options like BIOS
2_It will mostly cause the CPU Voltage to rise alot and will make stability problems.

I've never heard about that cpu voltage thing before, can't you just monitor the voltage to make sure that processor is safe and not going above healthy limits?

No. when you push the frequency, the voltage automatically adjust the voltage according to the requirement. By setting the voltage in the bios you cap the voltage hence the stability. As you go higher, you need to 'feed' the power to the cpu. its normal... just think of cars with horsepower.. the more u rev the engine the more juice it requires.  

Yeah, in almost every case, BIOS overclocking is much better than software overclocking.

When overclocking through the BIOS, you can generally reach a higher maximum overclock and can increase stability at lower overclocks.
It also allows you to set a maximum voltage when overclocking and lower it to the minimum required at a desired clock speed.

The notable exception would be ATI's software overclocking with their Phenom processors on their newer motherboards.
Although I have not had the chance to try it myself, I understand the software overclocking functionality is nearly equal to overclocking through the BIOS.

I overclock in bios.

I can't overclock at all in my bios but need more cpu performance in a cpu hungry game, are you guys suggesting it has a high chance to damage the cpu than vs bios overclocking? if so how much worse on my cpu is it?

No, if done properly, I would not say there is a higher chance of damaging your CPU as compared to BIOS overclocking. You probably will not be able to reach the same max overclock and your temps will be a bit higher due to the extra voltage but not really more dangerous.

I find it interesting that you have no BIOS overclocking options and yet you are able to overclock through software.
Normally, the software overclocking dynamically adjusts existing BIOS options.
Could you kindly post your full system specs, there may be something you are overlooking here.

depends on ur rig to be honest. In bios OCing, u can tweak timings, voltage, frequency, etc. You're in control of your system, plus its hard coded - meaning ur bios controls the functionality of the system, so when you boot the system is running as commanded by the bios. Bios uses the program to tweak it.. things can go wrong - like your board/cpu draining more juice than required..but I don't think you can do any harm in OCing with software - but I would rely on the hardware controlled device.

Believe me there are no overclocking options in my bios, I have an OEM machine. Compaq more specifically. My specs:

E2220@2.4GHz (stock)
2GB ram
Geforce 9600GSO
Vista home premium

I've used overclocking software before and it does in fact work.

Yeah, Compaq...
Defiantly no BIOS options.
Well, take it as far as software overclocking will let you go.
Test for stability with dual instances of prime95 and keep track of your temps with coretemp.
Make sure your temps never exceed 75c and you will be just fine.

Overclocking software technically works exactly the same overclocking in your BIOS.
Overclocking software does have the advantage that it can access settings that are not available in the BIOS, but are in fact supported by the motherboard on systems with limited BIOS tweaks.
The biggest problem Overclocking software has is that is does not allow the user to the multitude of variables that a decent motherboard would normally have available to the user in the BIOS.
The software only allows you access to the basic overclocking features, and then it try's to compensate for much of the tweaking of the finer details "behind the scenes" so to speak without your control.
Overclocking software will usually work fine for small/minimal overclocks.
Beyond that though, most people avoid using overclocking software because it simply does not work very well.
However, if you are limited to what you can do because you have a prebuilt system, and it's your only choice, use it but use it lightly.