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What Is a Soft Credit Check?

Christian Zanetis, Relationship Manager, First Republic Bank
December 17, 2021

  • There are differences between soft vs. hard credit checks: The former doesn’t affect your credit score and the latter does.

  • Soft credit checks are performed by lenders and other financial institutions to provide preapproval for new credit, like credit cards and loans.

  • A soft credit check is also called a “soft inquiry,” or a “soft pull.”

Credit checks are a common concern among people who’d like to maintain or strengthen their credit scores. Credit scores indicate to lenders — such as banks and financial institutions — how well you’ve handled credit in the past and help them gauge your risk if you are applying for credit. 

In some instances, new credit checks can bring down your credit score. However, not all do; soft inquiries do not, while hard inquiries do. But you may also have more questions about credit checks, such as: what are soft pulls, how do they work and how are they different from hard pulls? 

Soft credit check definition

Soft credit checks, often called “soft credit inquiries" and “soft credit pulls,” are credit inquiries performed by financial institutions and lenders, such as credit card companies, to check your credit standing. A soft credit check occurs when someone initiates an authorized check on your credit report that is not for the purpose of approving an application for new credit. 

Inquiries performed after you apply for credit are known as hard inquiries. In contrast, soft inquiries are primarily for informational purposes or preapproval. Please be sure to ask your banker/lender if an application involves a soft or hard credit check before applying as practices may vary from lender to lender.

There are several events that can trigger a soft credit inquiry, such as:

  • Lenders checking your credit for preapproval of a new credit card, loan, mortgage or other financing product, whether by your request or of their own volition (preapproval is not the same as actual approval from a creditor)

  • Employer credit checks, which are occasionally part of the application or background check process for job offers

  • Checking your own credit score or viewing your own credit report

  • Credit monitoring services, which evaluate your credit reports for unusual activity

How does a soft credit inquiry impact your credit?

While a soft credit inquiry may appear alongside your credit history on your credit reports from the three main credit bureaus (Equifax, Experian and TransUnion), it won’t impact your credit score whatsoever. As a result, soft credit checks are nothing to worry about because they won’t keep you from building and maintaining good creditworthiness.

In contrast, any inquiry that does directly impact your credit score is known as a hard inquiry. Knowing the hard credit check definition and the differences between soft vs. hard credit checks is important for building your credit. It also helps you understand how lenders interact with your credit report both before and during your application for new credit.

Hard vs. soft credit check

There are several differences between soft vs. hard credit checks. Hard credit checks are generally the result of you applying to borrow money through lenders, banks and other financial institutions for credit such as a personal loan, auto loan or line of credit. If you know someone is pulling your credit, ask if it's a hard or soft pull. In some cases, you may be able to request a soft credit check. 

Hard credit checks impact your credit scores, and while it’s possible for a hard credit inquiry to deduct up to 10 points from your credit score, generally the figure is much smaller and is usually just a few points. Luckily, these hard credit pulls last for a relatively short period of time and are removed from your credit reports (and therefore no longer affect your scores) after two years. The impact of a hard inquiry can vary depending on the credit scoring model (for instance, FICO score versus VantageScore).

Multiple hard credit checks made for certain types of new credit (mortgages, etc.) within a certain period of time (typically 30 to 45 days) tend to be grouped together in a process called “deduping.” This is meant to make it easier for consumers to shop for the best loan rates, otherwise known as “rate shopping."

Here are the two most important differences between these two types of credit inquiries:

 

What Is a Soft Credit Check?

What Is a Hard Credit Check?

Does It Affect Your Credit?

No

Yes

When Is It Performed?

During activities such as:

  • Preapproval for new credit products, such as credit cards or loans

  • Employer background checks

  • When you check your own credit or a credit agency is monitoring your credit report for unusual activity

During activities such as:

  • Approval for new credit products, such as credit cards, loans, mortgages, etc.

  • Deduping, or rate shopping

Prioritize careful credit management

Understanding how credit works is a vital piece of overall prudent financial planning and management. Part of this is knowing the difference between soft vs. hard credit checks, especially as you begin to look into new credit products, such as loans, credit cards, mortgages and more. It’s always important to know which type of credit check is happening, so you have a sense of how your score may fluctuate as a result.

To reiterate, no need to worry about soft inquiries as this type of credit pull won’t impact your credit score. This is good news for people trying to build and maintain strong credit scores and improve their creditworthiness. 

For further information on how credit checks work, and whether your score will be affected through new credit applications, it can be helpful to work with a reliable lender, such as First Republic’s Personal Lending professionals.

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