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What Is a Soft Credit Check and Where Can You Use It? | Our Must-Read Guide!

It is difficult to overestimate the impact of a credit score on our lives. With a good credit score, you can get a better loan, credit card or a cheaper personal one. However, if you find a bad credit lender, you can get an emergency cash immediately with bad credit with lower interest rates. In general, a credit score is affected by payment history (35% of your FICO Score), credit utilization (30%), length of credit history (15%), credit mix (15%), and new credit (10% of your FICO Score). Knowing your credit score, you can constantly evaluate your approval odds.

But few people know that credit checks also affect your credit score. So don't worry if you check your credit score - it certainly won't  worsen it and won't affect your credit report in any way, it certainly won't  worsen it and won't affect your credit report in any way. At the same time, there are such types of credit checks that, albeit for a short time, reduce your rating by just a few points.

Credit score on a phone

What is a credit check?

A credit check is also known as a credit inquiry. Credit checks are the records on your credit reports. They show who and when to access your credit profile.

Three major credit bureaus must disclose information about who has accessed your credit report. By law, they must do this at any time you request.

There are two types of a credit check (or credit inquiry): hard credit check (also known as hard credit inquiry or hard credit pull) or soft credit check (also known as soft credit inquiry or soft credit pull).

Hard credit check

Different names call it - hard credit check, hard credit pull, or hard credit inquiry, but the essence remains the same. Hard inquiries are usually used when you apply for credit applications through a traditional lender. The credit bureau checks your credit report and decides whether to give you a loan. Hard credit inquiries impact your credit scores - they lower your credit scores by a few points. This is because the credit scoring models consider how often and how long ago you applied for a loan.

Credit report in an envelope opened by a man


Hard inquiries will stay on your credit scores for two years. And last but not least, a hard inquiry will impact your credit score throughout the year. You can lose points off your credit score after one hard inquiry. But there is one crucial thing about hard inquiries - within 45 days, all requests are considered one. This is called rate shopping.

The real danger lies in multiple hard inquiries. Multiple inquiries (if it's hard credit checks) on credit reports during a short period may be perceived as unreliable by lenders.

Here are a few examples of hard credit checks:

  • Hard inquiry as a part of a credit card application or as a loan application.
  • For checking your credit scores by a collection agency trying to find you.
  • Hard pull by your credit card issuer after you apply for an increase in credit limit.
  • When the credit bureau checks your credit inquiry for applying for an auto loan, mortgage, credit card, or personal loan.

How many hard inquiries will be too much?

There is no exact number. But you have to observe your hard pulls. The number of hard inquiries at your credit report is one of the factors by which lenders evaluate your credit risk. And suppose you have a lot of inquiries on your credit score or loan applications. In that case, it makes you an unreliable borrower. Which, in turn, entails either a refusal to issue a loan or a higher interest rate.

Cartooned credit card under a magnifying glass

Soft credit check

Soft credit checks are also called soft credit inquiries or soft credit pulls. Soft inquiries don't impact your credit scores at all. Sometimes soft inquiries can take place without you knowing about them. For example, you received a new credit card offer by mail. It means that the credit card company makes a soft inquiry about your credit reports and decides that you can afford a new card.

Soft credit checks are also provided by other types of loan offers or insurance companies. In addition, potential employers can make soft pulls for your credit report for a background check. And none of these soft inquiries about your credit report will impact your credit score.

Here are a few examples of soft inquiries:

  • You check your own credit report.
  • A lender or other financial institution makes a soft inquiry for preliminary checks.
  • Credit card issuer checks an individual's credit history to offer you a new card.
  • An employer makes a soft inquiry to check employees.
  • If lenders who already handled credit make soft pull for account maintenance.
  • If you're opening a bank account.

Hard inquiries vs Soft inquiries

If you can choose between hard or soft pull, then the answer is obvious. It does not matter if you do the soft credit inquiry by yourself or, for example, credit card companies or a lender - it does no harm.

You should always check what type of verification lenders prefer. Sometimes you can encounter a hard one, even when renting a car or connecting to the Internet.

 Also, don't forget to check your credit report. From time to time, it happens that there may be errors in it. And it is in your interest to detect and eliminate them in time, challenging the mistakes and other inaccurate information.

FAQ

What is a soft credit pull?

A soft credit pull is when someone checks your credit report but not for the purpose of approving a request for new credit, this is known as a soft credit check.

Does a soft credit check affect your credit score?

No, a soft credit check does not affect your credit score. Unlike a hard pull, a soft pull will not impact your credit score. You can use it as often as you need or want.

What information is needed for a soft credit check?

You don't need much information for this. However, you must provide your name, date of birth, address, and Social Security number.

About Dusan Stanar

I'm the founder of VSS Monitoring. I have been both writing and working in technology in a number of roles for dozens of years and wanted to bring my experience online to make it publicly available. Visit https://www.vssmonitoring.com/about-us/ to read more about myself and the rest of the team.

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