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What Is a Soft Credit Check?

What Is a Soft Credit Check

A soft credit check is a type of inquiry that doesn’t affect your credit score. It happens when you check your own credit, or a lender pulls your credit when deciding whether to issue you a pre-approval offer. It can also occur when someone who is not offering you a loan, such as a potential employer, checks your credit with your permission.

Although these soft inquiries will show up on your credit report, they are different from hard inquiries, which are tied to loan or credit card applications. Learn what kinds of credit checks count as soft inquiries, how they differ from hard inquiries, and how they affect you.

 

What Is a Soft Credit Check?

A soft credit check is a request with your credit report started either by you or an organization. It can happen regardless of whether you apply for credit and is essentially used to evaluate for preapproval financing offers or personal investigations. Fortunately, a soft credit check doesn’t influence your exceedingly significant credit score, which is a mathematical portrayal of your financial soundness planned to assist creditors with deciding the probability of being repaid assuming they stretch out credit to you.

 

How a Soft Credit Check Works

Financial institutions and creditors may want to know whether you are managing your debt and credit history effectively. Creditors might also want to know information such as the number of late payments or your credit usages, such as how much you have borrowed on each loan or credit card. A soft inquiry—also called a “soft pull”—allows a creditor to review your credit report and credit score to get a sense of how well you are managing your credit.

 

A soft credit inquiry can occur even when you check your own credit report. Below are some of the most common examples of soft inquiries:

  • You give a potential employer permission to check your credit.
  • Financial institutions that you already do business with check your credit.
  • Credit card companies that want to send you preapproval offers to check your credit.
  • You apply for preapproval for a loan or mortgage.
  • Although soft inquiries don’t impact your credit score, they are listed on your credit report.

 

Soft Inquiry vs. Hard Inquiry

There is another inquiry that can occur during a credit check that you should be aware of, and it’s called a “hard inquiry” or “hard pull.” This happens when you apply for credit by filling out a credit card application. Hard inquiries also occur when you apply for a mortgage, an auto loan, or any number of other activities that result in a credit decision for or against you.

 

Hard pulls can harm your credit score for a few months and may stay on your credit report for about two years. The reason why credit bureaus factor hard inquiries into your credit score is that they assume that if you are applying for additional credit, you might be at greater risk of not paying back your existing debts. However, soft inquiries don’t impact your credit score because they are not a formal credit application, so credit bureaus don’t include them in their credit score calculations.

 

How Do Soft credit checks Impact Credit Scores?

Credit scoring models generate your credit score by analyzing the information in your credit report. Soft inquiries don’t have any impact on your credit scores.

 

Hard inquiries may remain in your credit reports for about two years and they can impact your credit scores. But the impact is typically small, and credit scores tend to rebound within a few months if no new negative information gets added to your credit report. Scoring models usually only consider hard inquiries from the previous 12 months when calculating your scores.

 

Multiple recent hard inquiries can do more damage to your credit scores. However, credit scoring models often combine (or “deduplicate”) multiple inquiries from a 14- to 45-day period—depending on the type of credit score—to avoid punishing consumers who are rate shopping.

 

Should You Worry About credit check?

In general, hard credit checks only play a minor role in your score, and fear of a hard credit check shouldn’t keep you from applying for credit when you need to open a new account.

Soft credit checks are even less worrisome because you could have dozens, or even hundreds, of soft credit checks in your credit reports—and they still won’t impact your credit scores.