Do Soft Credit Checks Affect Your Credit?

Credit checks are a fundamental aspect of personal finance, influencing access to loans, credit cards, and even housing. Financial institutions and other entities regularly review credit information to assess an individual’s financial behavior. These checks come in different forms, and understanding their nuances can help consumers manage their financial standing more effectively.

What is a Soft Credit Check?

A soft credit check, also known as a soft inquiry or soft pull, occurs when a person or company reviews your credit report for informational purposes. This type of inquiry does not signal an application for new credit, and it does not affect your credit standing.

Entities that perform soft credit checks include consumers checking their own credit reports or scores. Companies may also conduct soft inquiries to pre-screen individuals for promotional offers, such as pre-approved credit card invitations. Employers might perform a soft credit check as part of a background screening process, particularly for positions involving financial responsibility.

Impact on Your Credit Score

Soft credit checks do not affect your credit score. These inquiries are informational and are not associated with a specific application for new credit, so credit scoring models do not factor them into calculations. You can check your own credit report or score as often as you wish without negative consequences.

Soft inquiries are typically only visible to the consumer whose credit was checked, not to other lenders. While they may appear on your personal credit report for up to two years, they are not seen by potential creditors and do not influence their lending decisions. This allows individuals to monitor their credit health without concern for impacting their ability to obtain future credit.

How Soft Checks Differ from Hard Checks

The distinction between a soft credit check and a hard credit check lies in their purpose and impact on your credit score. A hard credit check, also known as a hard inquiry or hard pull, occurs when you formally apply for new credit or a loan, such as a mortgage, auto loan, or new credit card.

Hard inquiries can temporarily lower your credit score by a few points. Multiple hard inquiries within a short period can signal to lenders that you may be taking on additional debt, which could be viewed as an increased risk. Hard inquiries remain on your credit report for up to two years, but their impact on your score usually diminishes within a few months, and most scoring models only consider them for about 12 months.

Unlike soft checks, hard checks require your explicit permission, often obtained through a signed application. They are visible to other lenders, who may consider recent hard inquiries when evaluating your creditworthiness. It is generally advisable to limit hard inquiries to only when genuinely seeking new credit.

Common Scenarios for Soft Credit Checks

Soft credit checks occur in various routine financial situations, often without your direct involvement. One common scenario is when you check your own credit score or report through a credit monitoring service or directly from one of the three major credit bureaus.

Financial institutions frequently use soft inquiries to pre-screen consumers for pre-approved offers of credit cards or loans. Employers may perform soft credit checks as part of a background check for employment purposes, and insurance companies might use them when generating quotes for policies. Landlords also sometimes conduct soft pulls to assess a prospective tenant’s financial responsibility.