How Do Soft Credit Checks Work?

How Do Soft Credit Checks Work?

An inquiry that has no impact on your credit score is a soft credit check. It occurs when you do a credit check on yourself or when a lender runs a credit check on you to determine whether to extend you a pre-approval offer.

Definition and Examples of a Soft Credit Check

An inquiry is made on your credit report each time a company runs your credit. According to the Fair Credit Reporting Act, which provides you the right to know who is looking at your credit history, credit agencies are supposed to keep track of these requests.

A list of these queries can be found near the conclusion of your credit report when you check it. Although each inquiry is listed separately, there are actually two different sorts of credit checks: hard inquiries and soft inquiries.

When you check your credit report, a company checks it for marketing purposes, or a company with which you already have an account examines it, a soft inquiry, also known as a “soft pull,” is placed on your credit report.

  • Alternate names: Soft credit inquiry, soft credit pull

Unauthorized soft queries are made frequently. Fortunately, regardless of how many appear, they have no impact on your credit score.

How a Soft Credit Check Works

When someone analyzes your credit record without applying for new credit, this is known as a “soft inquiry.” For instance, if your prospective landlord wants to confirm that you have a trustworthy payment history, this might occur when you apply for an apartment. When a credit card issuer wishes to pre-approve you for a new card offer, it may perform a soft pull. If you will be in charge of managing the company’s money, a prospective employer may request authorization to run a credit check on you. Normally, each of these occurrences would prompt a mild question.

Soft inquiries provide these businesses with the data they require, but they cannot be utilized to formally approve your loan application. They will have to run a hard credit check for that.

Soft Inquiries vs. Hard Inquiries

Soft Inquiries Hard Inquiries
For reasons unrelated to new credit applications For the approval of new loans or lines of credit
Do not affect your credit score Make up 10% of your credit score
Only visible to you, and not others, when checking your credit report Stay on your credit report for two years

When a company reviews your credit report to decide whether to approve your application for a credit card, loan or other credit-based services, the credit bureaus record a hard inquiry. Hard inquiries account for 10% of your credit score and new credit accounts. They will continue to appear on your credit report for two years, but they will gradually have less of an impact on your score.

Credit bureaus typically include several hard loan queries made in a brief period of time as one query. Because of this, people can compare loans without repeatedly damaging their credit score.

A company may occasionally check your credit report for purposes beyond extending credit to you. For instance, if you are not using a major credit card, rental car businesses may occasionally check your credit. Ask the business pulling your credit report if you have any concerns about whether an inquiry will be harsh or soft.

It’s recommended to limit hard credit queries if you want to keep your credit score high—and especially if you intend to apply for a significant loan soon.

How Soft Inquiries Affect You

Soft inquiries don’t just have no impact on your credit score; they also go undetected by lenders when they check your record. Only when you order your own credit report can you see them.

But keep in mind that since it is your version of your credit report, if you pull a copy and provide it to a company to evaluate, the soft queries will show up.

Key Takeaways

  • An inquiry that does not lower your credit score is a soft credit check.
  • The majority of the time, these credit queries are unconnected to a loan or credit application.
  • Pre-approvals for credit cards, job applications, rental applications, and each time you pull your own credit report are examples of common soft inquiries.

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