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What is a soft credit check?

Your credit score and report are treated as confidential information and can only be accessed by selective entities you have explicitly authorized to check your credit. When you allow anyone to look at your credit score, each of these requests to view your credit score is called a credit check or a credit inquiry. However, suppose anyone tries to use your personal information to obtain your credit score, you might have the right to sue for actual damages or $1,000, whichever is greater, as per the legal website Nolo. You can read more on who can't access your credit in this Nerdwallet article.

You are probably aware that credit checks or 'pulls' are mainly of two kinds- hard and soft. Each of them is performed to serve different purposes under different situations and have a varying effect on your credit score. Although hard credit checks are a bit more complicated, let's first learn every minute detail about a soft credit check, how it works, and its impact on your credit.

What Is a Soft Credit Check?

A soft credit check, also known as a soft inquiry or soft credit pull, is a type of inquiry into your credit report initiated by an interested party or you. These checks are relatively random and for a more general purpose. Moreover, anyone can run these soft credit checks without your permission or even knowledge.

Here are some examples of who can perform a soft credit check and when:

  1. You: to check your credit score and report by yourself
  2. Insurance companies: to assess the risk
  3. Potential Employers: as part of your background checks
  4. Credit card issuers: for issuing preapproval offers
  5. Credit monitoring services: to track signs of identity theft
  6. Creditors: to help determine the likelihood of being paid back
  7. Landlords: to make sure that a prospective tenant is trustworthy

How Does a Soft Credit Check Work?

Soft pulls help all the above-mentioned interested parties get the required information to make an informed decision. Your credit information will never be shared or made available to the public without any purpose or authority.

Now that you know who can perform a soft pull on your credit report, you might be interested in learning the different ways through which one can do so. If you wish to check your credit report, you can do it by checking your score or getting a copy of your report. This process is free and accessed from a government-authorized website AnnualCreditReport.com. In addition, you can legally request and receive one report from each of the credit bureaus in a year.

There are genuine personal finance websites that can also assist you in checking your credit score or report and are not considered hard inquiries. Even credit card companies offer free credit score assessments that are considered soft inquiries. The reports from these assessments can provide you with information relating to your credit every month.

What Are the Benefits of a Soft Credit Check?

With nearly no disadvantages, a soft inquiry can help you in improving your financial condition in many ways:

  1. Soft pulls don't hurt your credit score.
  2. It allows you to regularly watch your credit reports to make sure your credit report is free from any errors. Substantial errors on your report can lower your credit score and, in turn, reduce the chances of getting approved for a loan.
  3. A hard credit check will generally mean a rejection for people with bad credit. So when a bad credit lender runs a soft credit check, borrowers don't have to worry about the impact of the inquiry on their credit score and still get a chance to be approved for the loan.
  4. You can also check who is looking at your credit report to ensure no one is misusing your personal and financial information. Fortunately, if you see anything fishy, you can lock your data which will freeze your credit and restrict people from making soft and hard inquiries without your permission or action.

Will a Soft Credit Check Affect My Credit Score?

Absolutely no! A soft credit check is considered a relatively lenient way of pulling your credit report out of the two types of credit inquiries. It neither impacts your credit score nor appears on your credit report. The soft pulls will only appear on your version of the credit report, and nobody else will be able to view them.

On the other hand, every hard inquiry is reflected on your credit report and affects your score negatively. A high number of hard inquiries could portray you as a risk to the potential lender. Since soft credit checks are not associated with lending decisions, they may not negatively impact even if they are reflected on the report. However, a soft pull will only give you some basic information on your credit and not provide details of any defaults or late payment records.

Some people get anxious when they hear about credit inquiries. It can be because they may not know the clear difference between hard and soft credit checks and their effects on credit score. Knowing that soft credit inquiries have no impact on their credit profile would help them breathe a sigh of relief.

What's the Difference Between a Soft Credit Check and a Hard Credit Check?

Understanding the difference between hard and soft inquiries is essential to safeguard your credit and finances. Whether you are applying for a form of credit or need a house for rent, a credit check will be performed, and the differences listed below will tell you which one it will be. So now, let's dive into the key differences between the two types of credit checks:

Factors Soft Credit Check Hard Credit Check
Effect on your credit score It does not affect your credit score and also is also not reflected on your credit report. Only you can see soft inquiries. It lowers your credit score by a few points. Moreover, the effect stays on your credit report for two years.
When does it occur Usually occurs when a potential employer checks your credit or credit card provider runs preapproval checks. A soft pull also occurs when you check your own credit. It mainly occurs when you apply for a specific credit option like a mortgage or a personal or business loan.
Need for consent It can be performed without your consent. It always requires your written consent.

 

Get a Loan with No Credit Checks at CASH 1

If you're worried about credit checks, CASH 1 offers you no traditional credit check loans which are easy to qualify for. This is one of the best ways to get funds quickly, even with bad credit and without any risk of hurting your credit score further. When you apply for a CASH 1 loan, we don't run any hard inquiry and consider factors other than your credit score to determine your ability to repay the loan. Bad credit lenders usually run soft pulls which don't affect your credit and still allow you to qualify for a loan. Hence, understanding a soft credit check and how to get a free credit report can help you maintain and improve your credit score.

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