What Is a Soft Credit Check?

Your credit history has a great deal of impact on your life. This means you should take full advantage of the fact that the three major credit bureaus-Experian, TransUnion and Equifax-offer one free credit report each year for consumers.

Who else is checking your credit? When you check your credit report, you will find out – and you may be surprised. Have you ever received a credit card offer in the mail? Did you wonder how those credit card companies knew that you qualify for a certain credit card with a specific credit limit? It is likely that the credit card company checked your credit history before sending that offer. When someone looks at your credit history for informational or promotional purposes, this is a soft credit check, and it will appear on your credit report for your information.

Why a Soft Credit Check?

The Fair Credit Reporting Act requires the major consumer credit reporting bureaus to keep a record of all the businesses that look at your credit score.  A soft credit check is when your credit is pulled for any reason other than you applying for a loan or new credit. Examples of  soft inquiries include:

  • Reviews of your credit score or history by an existing lender with whom you have an existing line of credit
  • Reviews by potential landlords
  • Reviews of your credit for insurance purposes
  • Pre-approved credit offers
  • When you check your own credit report or score

Typically, soft inquiries remain on your credit reports for two years to give you a clearer picture of all the institutions that have checked your credit. These soft credit checks don’t affect your credit.

What Is the Difference Between a Soft Check and a Hard Check?

A hard credit check occurs after you apply for any type of credit, such as a credit card, a mortgage, personal loan or an auto loan.  Once the credit application has been submitted, the potential lender makes an inquiry into your credit score and history to see whether you qualify for the account.

If your credit report shows a large number of hard inquiries, that may negatively impact your credit score. This is because numerous hard inquiries indicate high credit risk to lenders; lenders assume that frequent applications for credit indicate that you’re having a hard time managing your finances.

No matter how many soft inquiries appear on your credit report, your credit score will not suffer in any way. The more hard inquiries you make, the more your credit score will be negatively affected by those inquiries.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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