How does a soft credit check when buying a house affect your score?

When you apply for a loan, new job, or apartment to rent, you may need to undergo a soft credit check where your potential lender, employer, or landlord reviews your credit history. This process can provide whomever you’re applying with a better sense of your financial reliability, and – unlike other credit inquiries – it won’t affect your credit score.

Soft credit checks involve more than this, though. Let’s look into how soft credit checks work, who can perform them, and how they differ from hard inquiries.

What is a soft credit check?

A soft credit check, also called a soft credit pull or a soft credit inquiry, is a way for someone to look at your credit report without affecting your credit score. This occurs when you, a company, or an authorized individual looks over your credit report to see how you manage your debts. When you’re shopping for a loan, you may undergo numerous soft credit checks in hopes of finding the best possible interest rate.

A soft credit check often happens without you being aware of it. Take, for example, those prequalified credit card offers you get in the mail. The companies sending them did a soft credit check to prescreen your eligibility.

You might also encounter soft credit checks when:

• You’re shopping for a mortgage or personal loan and comparing rates
• You’re applying to rent an apartment
• You’re opening a new checking or savings account
• An employer wants to verify financial responsibility for certain jobs 

Checking your own credit report is also considered a soft credit check.

In a sense, soft credit checks don’t hurt your credit score, they’re simply a way to help others and you understand your financial habits without making a big impact.

Soft vs. hard credit check

As the difference in name suggests, a hard credit check or hard inquiry and a soft credit check don’t have much in common. For starters, only a hard credit check negatively impacts your credit score.

Also, a soft inquiry is used for background checks or a prescreened offer while a hard inquiry is used when applying for any type of loan and requires your consent. A hard pull can take up to five points off your credit score for around a year but will typically remain visible on your credit 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. However, in the case of a mortgage, a lender will run a credit report through all three agencies. A hard credit check will never take place without you knowing or granting authorization, though.

What does a soft credit check show?

Soft credit checks provide the individual or company performing the inquiry with some of the basic information of your credit report. Unlike a hard credit check, which pulls your full credit report, a soft credit check can provide a good glimpse into your creditworthiness. Typically, the individual or company requests specific information from your credit report. This could include your payment history and any loans or debt you have.

A soft credit check won’t reveal personal information like your birth date, age or marital status. It also keeps sensitive info like your account numbers and credit scores private. More importantly it respects your privacy and doesn’t affect your credit score in any way.

Who can do a soft credit check?

Because your consent isn’t required for a soft credit check, when a credit card company runs a soft credit pull without your consent, you may wonder, who else can?

The following individuals and institutions may perform or ask permission to do a soft credit check:

• Yourself: When you check your own credit report and score, it’s considered a soft check. Checking your credit regularly is a great way to stay on top of your financial health.
• Credit card companies: As mentioned, 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.
• Potential employers: 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 financially responsible you are.
• Landlords: When renting an apartment, the landlord will want to know the likelihood of you paying your rent on time, and they’ll run either a hard or soft pull. Utilizing services offered by a major credit bureau will often result in a soft credit check rather than dealing with a background and screening company.
• Insurance companies: Similar to credit card companies, providers of homeowners, auto, and other types of insurance typically require at least a soft credit check.

Can you get a personal loan with only a soft pull?

Most personal loans require a hard credit inquiry with a full application. You’ll only need a soft credit check to get prequalified for a loan, though.

An important part of the personal loan process involves prequalification – where a lender can provide an estimate of your qualifying rates and terms based on a soft credit check. As always, this soft inquiry won’t affect your credit score.

While not 100% accurate, getting prequalified for a personal loan can tell you and your lender whether your finances suggest you’re up for repaying a loan on time.

If you proceed with your personal loan application after prequalification, you must undergo a hard inquiry, which will have some impact on your credit score.

Soft credit check loans or no credit check loans

While soft pull personal loans are rare, the following loan options can offer no credit check approvals.

• Payday loans: Payday loans typically require no credit inquiries of either kind but require that you repay your loan by the date of your next paycheck. High interest rates and rollover fees may make you think twice about going with this type of lender.
• Title loans: A car title loan lender may forgo a credit inquiry but take the title of your vehicle as collateral. Like payday loans, high interest rates and fees can trap you in a debt cycle. What’s worse? You may lose your car if you can’t make your payments.
• Pawn shop loans: As with title loans, pawn shop loans take collateral in place of conducting a credit check. Pawn shop loans also have high interest rates, and you risk losing whatever you use for collateral.
• Family loans: Personal loans between family members can have more lenient credit requirements, as the family member lending the money can choose if they want to do a credit check. Paying back a family loan, however, won’t boost your credit score, as the loan is processed without the involvement of credit bureaus or other financial institutions.

Instead of taking the risk on these no credit check loans, many borrowers prefer to find ways to improve their credit score.

FAQs about soft credit checks

For more information about soft credit checks, explore the questions other people are asking.

Does a soft credit check affect my credit?

No, it doesn’t. That’s the reason it’s called a “soft” inquiry, as opposed to a “hard” one. When 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 when you’re not accessing any money or credit (like when browsing potential loan offers), so the inquiry has no effect on your overall credit score.

Can I see soft inquiries on my credit report?

Yes, on your credit report, you can view any of the soft inquiries that have been pulled.

How long does a soft credit check stay on my record?

Soft credit checks can stay on your credit report for 12 – 24 months. That means, in the case where a soft credit check remains on your credit report for 2 years, it may appear there for as long as a hard credit pull. While a soft inquiry won’t affect your credit score, it’ll be visible on your report in the short term. This is because the Fair Credit Reporting Act requires credit bureaus to communicate on your report every inquiry that’s been made and keep inquiries visible for a certain amount of time.

The bottom line: Final thoughts about soft credit inquiries

A soft credit check informs you and a lender how much you can comfortably afford to pay back considering your financial situation. This credit check will have no effect on your credit score and can sometimes occur without you even knowing, as in the example of a credit card offer versus a credit score-affecting hard inquiry. When seeking preapproval or prequalification, it’s common to have multiple soft credit checks while rate shopping for the best deal.

Want to see your prequalified rates for a personal loan? Get an application started today with Rocket Loans℠.