Your credit score is one of the most important factors that determines your financial opportunities and options. Lenders rely on credit scores to assess the risk of lending money to consumers. Before approving loans, credit cards, mortgages and other lines of credit, most lenders will check an applicant’s credit report and score. These credit checks come in two main forms – soft credit checks and hard credit checks. Both provide insight into someone’s creditworthiness, but in different ways.
In this comprehensive guide, we will explain everything you need to know about soft credit checks – what they are, why they are used, how they work, and most importantly, how they impact your credit score compared to hard checks.
What is a Soft Credit Check?
A soft credit check, also known as a soft credit inquiry or soft pull, is a type of credit check that does not affect your credit score. Soft credit checks allow lenders, employers, landlords, or other entities to review limited information from your credit report without impacting your overall credit rating or score.
Soft credit checks are used to:
- Pre-qualify consumers for credit cards or loans. Pre-qualification lets consumers see what kind of rates/terms they may qualify for without a hard inquiry.
- Review or monitor existing accounts. Creditors routinely check credit reports of current customers this way to assess credit risk.
- Screen rental or job applications. Landlords and employers can request soft checks to check creditworthiness.
- Provide access to your own credit reports or scores. When you check your own credit, it results in a soft pull.
- Offer credit monitoring services. Companies like Credit Karma use soft pulls to send you alerts and updates without affecting your score.
The key difference between a soft credit check and a hard credit check (explained more below) is that soft checks are invisible to other lenders and do not impact your credit score.
What Shows Up in a Soft Credit Check?
When a company conducts a soft credit check, they cannot see your full credit report. Soft checks only provide limited details like:
- Your name
- Current and previous addresses
- Public records like bankruptcies or tax liens
- Past credit inquiries
Soft checks do NOT show any information about your current credit accounts, balances, payment history or credit utilization. So lenders cannot make formal credit decisions based only on soft checks.
Soft Check vs. Hard Check: Key Differences
While both provide information from your credit report, there are a few key differences between soft credit checks and hard credit checks:
- Visibility: Soft checks are not visible to other lenders, while hard checks can be seen by other creditors.
- Impact on credit score: Soft checks do not affect your score but hard checks may lower it slightly for a short period.
- Consumer consent: Soft checks can happen without your approval but you must consent for a hard check.
- Depth of information: Hard checks provide full details, while soft checks offer limited information.
- Credit applications: Hard checks stem from applications for new credit, soft checks do not.
- Duration on credit report: Hard inquiries stay on your report for 2 years. Soft checks are not reported at all.
So in summary, soft credit checks are invisible, do not need approval, have no impact on your score, and provide limited data. Hard checks are visible, require consent, may lower your score, provide full data, and stay on your report for 2 years.
How Do Soft Credit Checks Impact Your Credit Score?
The most important thing to understand about soft credit checks is that they do not affect your credit score in any way.
Whether it’s checking your own credit report, allowing creditors to routinely review your accounts, applying for pre-qualified offers, or using credit monitoring services, soft checks will NOT lower your credit score.
That’s because soft credit inquiries are never factored into credit scoring models or visible to other lenders evaluating your creditworthiness. Only hard credit checks stemming from actual credit applications may impact your score.
Some key points about how soft checks impact your credit score:
- You can have unlimited soft checks without consequence. The number of soft inquiries does not matter.
- Soft checks leave no footprint at all on your credit history. They do not get reported to the credit bureaus.
- Frequent soft checks from things like account review or credit monitoring are benign. Don’t worry about them.
- Soft checks reveal only limited information, not enough for making credit decisions that could affect your score.
- The same exact soft check may result in numerous inquiries as it’s shared among lenders, but will still not impact your score at all.
So rest assured, soft credit checks are a worry-free way to “check in” on your credit without any downsides.
Should You Ever Be Concerned About Soft Credit Checks?
For nearly all consumers, soft credit checks are harmless and nothing to worry about. As long as you have authorized the business to access your credit data, routine soft checks are benign.
However, here are two situations where you may want to be alert about soft inquiries:
Identity Theft: If you notice soft checks from creditors you don’t recognize, it could indicate fraud. Someone may be checking your credit while attempting to open fraudulent accounts. Dispute any unfamiliar soft checks.
Too Many Hard Checks: If you see many hard inquiries along with soft checks, it could mean you’re seeking too much credit at once and risking your score. Every hard check will have an impact.
Other than watching out for those situations, soft checks are nothing to be concerned by. Just monitor your credit reports a few times a year to spot any unauthorized activity.
Soft Check vs. Hard Check: Which Should You Opt For?
When given the choice, a soft credit check is almost always preferable over a hard credit check. Here’s why:
- Soft checks allow you to “test the waters” for pre-qualified offers without risk.
- Applying for financing from multiple lenders results in fewer hard checks dinging your score.
- Peace of mind knowing your credit score won’t take an unnecessary hit.
- More frequent access to view your credit reports and monitoring alerts.
The only reason to undergo a hard credit check is when formally applying for a new line of credit. Soft checks are the way to go for general review purposes without impacting your score.
Key Takeaways on Soft Credit Checks
- Soft credit checks allow limited access to your reports without your consent and have no impact on your credit score.
- They are used to pre-qualify you for offers, monitor accounts, screen applications, or provide your credit information.
- Hard checks are required when formally applying for credit and may temporarily lower your score.
- Multiple soft checks are harmless, but too many hard checks signals risk to lenders.
- Monitor for unauthorized soft checks that may indicate fraud or identity theft.
- Opt for soft checks over hard checks whenever possible to avoid credit score damage.
Frequently Asked Questions (FAQ)
What triggers a soft credit check?
Common triggers for soft credit checks include:
- Pre-qualification for credit cards or loans
- Creditors reviewing or monitoring your existing accounts
- Landlords screening rental applicants
- Employers checking candidates as part of job applications
- Your own requests to check your credit reports or scores
- Credit monitoring services alerting you to key changes
What is the difference between a soft check and a hard check?
The key differences are that soft checks do not affect your credit score, are not visible to other lenders, and do not require your approval. Hard checks may impact your score, are viewable by other creditors, and require consent.
How long do soft checks stay on your credit report?
Soft credit inquiries are not reported at all and leave no footprint on your credit history. Only hard credit checks remain on your report for approximately two years.
Can a business do a soft check without your permission?
Yes, creditors and certain service providers may conduct soft checks without approval for routine account monitoring and credit checking purposes. But hard checks require your consent.
How many soft checks are too many?
There is no limit to the number of soft credit checks you can have, as they do not get reported or impact your score. You would only want to monitor for unauthorized soft checks that may indicate fraud.## Protecting Yourself During Soft Credit Checks
While soft credit checks don’t affect your score, you still want to take reasonable precautions around who can access your reports. Here are some tips:
- Check statements and reports for any unauthorized or suspicious soft inquiries. Dispute them immediately.
- Freeze your credit to restrict all access if you suspect identity theft. This prevents soft or hard checks.
- Opt out of pre-screened offers to reduce unneeded soft checks. This prevents pre-approved credit offers.
- Set up credit monitoring alerts so you are notified of every soft check done.
- Ask creditors if they will do a soft check instead of a hard one. For existing accounts, they likely can.
- Avoid payday lender checks as they may do hard pulls even for pre-qualifying. Stick to major banks/lenders.
- Read the fine print so you understand when opting-in to free credit services that require soft pulls.
Exercising reasonable caution helps ensure only authorized parties can perform soft checks while also monitoring for potential fraud. But for most, soft inquiries are not a major concern.
Alternatives to Soft Credit Checks
While soft credit checks are harmless, some people may prefer even less invasive alternatives in certain cases. Here are a few options:
- Get a copy of your own credit report without even a soft check required. AnnualCreditReport.com provides your Equifax, Experian, and TransUnion reports for free once a year.
- Check your credit score through third-party sites without permitting a pull. Many sites like Credit Karma offer free credit scores updated monthly.
- Ask creditors if they can qualify you without a credit check at all, particularly if you have a long positive history with them already.
- Provide income verification instead of allowing a soft or hard credit check for loans or rental applications. Pay stubs may satisfy lenders/landlords in some cases.
- Freeze your credit so no inquiries can happen until you lift the freeze temporarily. Freezing blocks soft and hard pulls.
Depending on the purpose, you may be able to avoid checks altogether. But most routine soft checks are innocuous, making alternatives unnecessary in many cases.
Checking credit reports and scores is necessary to maintain financial health and access opportunities. Soft credit checks offer a consumer-friendly method to monitor your credit or seek pre-approved offers without any damage to your rating or history. They provide peace of mind for many users and help open doors to credit.
The key is being an informed consumer – recognize when a soft check may occur, review statements for accuracy, and dispute suspicious inquiries. But rest easy knowing that ordinary soft checks from authorized sources are a safe way to keep tabs on your credit without hurting your score.