What Is A Soft Credit Check And Does It Affect Your Credit?
When you apply for a job, your potential employer will often perform a background check into your work history to get a feel for what kind of employee you would be. As part of this process, they may also ask to view your credit history for a better sense of your reliability. This is what’s known as a soft credit check (or soft credit inquiry) – and before you start feeling nervous about what this means for you or your credit score, you should read what we have to say about what soft credit checks really are and how they work.
How A Soft Credit Check Works
A soft credit check, also called a soft credit pull or a soft credit inquiry, occurs when a company or creditor looks over your credit report to see how you manage your debt. Checking your own credit report is also considered a soft credit check.
A soft credit check can even occur without you being aware of it. Those prequalified credit card offers you get in the mail? Those companies did a soft credit check to prescreen your eligibility.
Other instances of a soft credit check can include renting an apartment or opening a bank account. Getting a look at how you manage your money can prove reliability and bring peace of mind to an employer, landlord or creditor.
What Information Is Needed For A Soft Credit Check?
The information pulled for review in a soft credit check is like what you see when you check your report yourself:
- Your payment history
- Loans or lines of credit
- Collection amounts
A soft credit check won’t reveal personal information like your birth date, age or marital status. You can also rest easy knowing it won’t reveal any of your account numbers or your credit score, either.
Who Can Do A Soft Credit Check?
Since credit card companies can do a soft credit pull without your consent, you may wonder just who else is allowed to do this. A soft credit check is rarely done without a good reason for doing so, though, or done by just anybody off the street.
The following individuals and institutions may perform or ask permission to do a soft credit check:
Credit Card Companies
As mentioned above, credit card companies may do a soft credit check on your report to see if you’re prequalified for a new card they’re offering. They’ll send you these offers with the option to sign up.
Soft credit checks can be a part of a background check when applying for a job. Employers can look at any late payments or collected bill amounts and have an idea of how responsible of a person you are.
When renting an apartment, the landlord will want to know how likely you are to pay your rent on time. A landlord will run either a hard or soft pull, depending on the means they use to do it. Utilizing services offered by a major credit bureau will often yield a soft credit check, rather than going through a background and screening company.
Similar to credit card companies, getting a quote for homeowners, auto or other types of insurance requires at least a soft credit check.
Will A Soft Credit Check Hurt My Credit Score?
There’s a reason it’s called a "soft" inquiry as opposed to a "hard" one. In the case of following through and taking out a personal loan, or applying for a mortgage or credit card, a credit check normally impacts your score. A soft credit check occurs in an instance where no money or credit is being lent out (like when browsing for potential loan offers), and so the inquiry has no effect on your overall credit score. This goes for checking your credit score, too.
What Is A Hard Inquiry?
As the differences in the two names suggest, a hard credit check is the opposite of a soft one in nearly every way. A hard inquiry happens when applying for any type of loan and will require your consent. A hard pull can initially take up to five points off your FICO score and would remain visible on your report for about 2 years.
In most hard credit check cases, a lender or creditor will pull your report from only one of the major credit bureaus – Equifax, Experian or TransUnion – except in the case of a mortgage where all three are checked.
To reiterate, a hard credit check will never take place without you knowing or granting authorization.
As you can see, a soft credit check is less an invasion of privacy and more of a confirmation that you are a creditworthy individual. With little to no risk to your hard-earned credit score, rest assured these pulls are just another step in the processes of your financial life. And if you know you’ve got good credit history, relax and let them see how good at building credit you really are.
Ready To Improve Your Financial Life?
Apply for a personal loan today to consolidate your debt.Apply For A Loan
Does Closing Your Credit Card Hurt Your Credit Score?
Looking to close your credit card? Read our guide to learn more about if closing your credit card hurts your credit score, and what actions you should take.
Financial Moves You Should Make At Each Age Of Your Life
For whatever stage you are at in your financial journey, here are the best money management moves you can make during each season of your life.