How to Do a Soft Credit Check and When It Applies
Understand soft credit checks: their purpose, how they work, and why they don't affect your credit score. Gain valuable financial insight.
A soft credit check is a routine inquiry into an individual’s credit history that does not negatively affect their credit score. This type of check provides a snapshot of creditworthiness without the implications of a full credit application. This article explores what a soft credit check entails, how individuals can access their own credit data, common scenarios where these checks occur, and the specific information they reveal.
What a Soft Credit Check Means
A soft credit check, often referred to as a “soft pull” or “soft inquiry,” occurs when a person or company reviews an individual’s credit report without impacting their credit score. This differs significantly from a “hard credit check,” or “hard pull,” which typically happens when an individual applies for new credit, such as a loan or credit card. Hard inquiries usually require explicit permission and can temporarily lower their credit score by a few points, remaining on the credit report for up to two years.
Soft credit checks do not affect credit scores. These inquiries may or may not appear on a credit report, depending on the credit bureau, but if they do, only the individual can see them. The primary distinction lies in purpose and impact; soft checks are informational, while hard checks are tied to a lending decision that assesses repayment risk.
How to Access Your Own Credit Information
Individuals can perform a soft credit check on themselves to review their financial standing. One method involves utilizing AnnualCreditReport.com, the official website, to obtain a free credit report from each of the three major nationwide credit bureaus: Equifax, Experian, and TransUnion. By law, individuals are entitled to one free report from each bureau every 12 months, though weekly access has been permanently extended. Accessing these reports online typically provides immediate results after identity verification.
Many financial institutions, including banks and credit card issuers, offer free access to credit scores and sometimes full credit reports through their online banking portals or mobile applications. These services allow individuals to monitor their credit health regularly, providing insights into factors influencing their score. Various reputable credit monitoring services also provide free credit scores and reports, often updated monthly, enabling consistent oversight.
Situations Involving Soft Credit Checks
Soft credit checks are commonly used by entities other than the individual, typically when there isn’t a direct application for new credit. One frequent scenario involves pre-qualified offers for credit cards or loans that individuals receive in the mail or online. Lenders perform these checks to assess eligibility and extend promotional offers without a formal application, allowing them to gauge creditworthiness and target potential customers.
Other situations where soft inquiries are used include:
- Insurance companies when providing quotes or underwriting policies.
- Landlords and utility providers as part of a background screening process for potential tenants or new service applicants.
- Employers during background investigations for certain job roles, particularly those involving financial responsibility.
- Existing creditors who periodically run soft checks to review current accounts, adjust interest rates, or offer new products.
Information Revealed and Score Impact
When a soft credit check is performed, the information revealed typically includes personal identifying details such as name, address, and Social Security number. It also provides an overview of credit accounts, including types of credit, account opening dates, payment history, and current balances. Public records like bankruptcies or collections may also be visible. This comprehensive snapshot helps the inquiring party understand the individual’s financial behavior.
A soft credit check has no impact on an individual’s credit score, regardless of who initiates it. These inquiries are for informational or pre-screening purposes and do not indicate a higher risk to lenders, ensuring that an individual’s credit standing remains unaffected.