Do Soft Credit Checks Show Up on Your Credit Report?

Financial entities frequently examine an individual’s credit history to assess their financial reliability and past management of obligations. This process involves various types of inquiries into an individual’s financial background. Understanding how these different credit inquiries function is an important aspect of managing personal finances effectively.

What is a Soft Credit Check

A soft credit check, also known as a “soft inquiry” or “soft pull,” involves a review of an individual’s credit report that does not impact their credit score. This type of inquiry is typically a quick look at your credit information and is not tied to a specific application for new credit. For instance, when you check your own credit score through a financial service provider or a credit monitoring service, it is generally considered a soft inquiry.

Soft credit checks are commonly performed by companies for various purposes, such as pre-approving individuals for credit card offers or loans without a formal application. Landlords may conduct a soft inquiry as part of a background check for rental applications, and insurance companies might use them when generating quotes. Similarly, some employers may perform a soft credit check during a background verification process for employment.

Soft credit checks do not show up on your credit report in a way that is visible to other lenders. While these inquiries may be visible to you if you access your personal credit report, they are not factored into credit scoring models used by lenders.

Soft Checks Versus Hard Checks

A hard credit check, also known as a “hard inquiry” or “hard pull,” occurs when a lender formally accesses your credit report because you have applied for new credit. This type of inquiry is typically initiated when you seek a mortgage, an auto loan, a new credit card, or a personal loan. Unlike soft checks, hard inquiries require your explicit permission, often granted when you sign a credit application.

Hard checks appear on your credit report and are visible to other lenders for up to two years. Their presence signals that you are actively seeking new credit, which can be a factor in a lender’s decision-making process.

The impact of these inquiries also differs significantly. While soft checks have no effect on your credit score, hard checks can temporarily influence it. For example, applying for multiple credit cards from different issuers at the same time could lead to several hard inquiries. However, many credit scoring models often treat multiple inquiries for the same type of loan, such as a mortgage or auto loan, within a concentrated period as a single inquiry to allow for rate shopping.

Impact on Your Credit Score

Credit scoring models, such as FICO and VantageScore, are designed to differentiate between inquiries that indicate an intent to borrow and those that are merely for informational or pre-screening purposes. Therefore, an individual checking their own credit report or receiving a pre-approved offer will not see their score change as a result of a soft inquiry.

Conversely, hard credit checks typically result in a small, temporary dip in an individual’s credit score, often by a few points, such as 5 to 10 points. This minor reduction is usually short-lived, with the impact diminishing over a period of a few months and typically disappearing entirely within a year. The reason for this temporary decrease is that actively seeking new credit can be perceived by scoring models as an increased risk, particularly if numerous applications occur within a short timeframe.

However, the effect of a single hard inquiry is generally minimal and should not deter an individual from applying for necessary credit. The overall impact on a credit score is more heavily influenced by factors such as payment history and credit utilization. Responsible management of existing credit obligations will generally outweigh the minor, temporary effect of a hard inquiry on an individual’s credit standing.