Soft Credit Check: Does It Affect Your Credit?

When you apply for a loan, new job or apartment to rent, you may need to undergo a soft credit check where your potential lender, employer or landlord reviews your credit history. This process can provide whomever you’re applying with a better sense of your financial reliability, and – unlike other credit inquiries – it won’t affect your credit score.

Soft credit checks involve more than this, though. Let’s look into how soft credit checks work, who can perform them and how they differ from hard inquiries.

A soft credit check, also called a soft credit pull or a soft credit inquiry, occurs when you, a company or an authorized individual looks over your credit report to see how you manage your debts. Someone shopping around for a loan may undergo numerous soft credit checks in hopes of finding the best possible interest rate.

A soft credit check can even occur without you being aware of it. Take, for example, those prequalified credit card offers you get in the mail. The companies sending them did a soft credit check to prescreen your eligibility.

Other instances of a soft credit check can include renting an apartment or opening a bank account. Getting a look at how you manage your money can bring peace of mind to an employer, landlord or creditor.

Checking your own credit report is also considered a soft credit check.

As the difference in name suggests, a hard credit check (or hard inquiry) and a soft credit check don’t have much in common. For starters, only a hard credit check negatively impacts your credit score.

Also, a soft inquiry is used for background checks or a prescreened offer while a hard inquiry is used when applying for any type of loan and requires your consent. A hard pull can take up to five points off your FICO® Score for around a year but will typically remain visible on your credit report for about 2 years.

In most hard credit check cases, a lender or creditor will pull your report from only one of the major credit bureaus – Equifax®, Experian™ or TransUnion®. However, in the case of a mortgage, a lender will run a credit report through all three agencies. A hard credit check will never take place without you knowing or granting authorization, though.

Soft credit checks can provide the individual or company performing the inquiry with some of the basic information of your credit report. This report won’t be as detailed as a hard inquiry, but it can provide a good glimpse into your creditworthiness. Most of the time, the individual or company will request specific information from your credit report. This could include your payment history and any loans or debt you have.

A soft credit check won’t reveal personal information like your birth date, age or marital status. It won’t reveal any of your account numbers or your credit score, either.

When a credit card company runs a soft credit pull without your consent, you may wonder just who else can do this. While a hard inquiry is never allowed without your consent, your consent isn’t needed for a soft credit check. However, a soft credit check is rarely done without a good reason, and not just anybody will do this pull.

The following individuals and institutions may perform or ask permission to do a soft credit check:

• Yourself: When you check your own credit report and score, it’s considered a soft check. Checking your credit regularly is a great way to stay on top of your financial health.
• Credit card companies: As mentioned, credit card companies may do a soft credit check on your report to see if you’re prequalified for a new card they’re offering. They’ll send you these offers with the option to sign up.
• Potential employers: Soft credit checks can be a part of a background check when applying for a job. Employers can look at any late payments or collected bill amounts and have an idea of how financially responsible you are.
• Landlords: When renting an apartment, the landlord will want to know the likelihood of you paying your rent on time, and they’ll run either a hard or soft pull. Utilizing services offered by a major credit bureau will often result in a soft credit check rather than dealing with a background and screening company.
• Insurance companies: Similar to credit card companies, providers of homeowners, auto and other types of insurance typically require at least a soft credit check.

Most personal loans require a hard credit inquiry with a full application. You’ll only need a soft credit check to get prequalified for a loan, though.

An important part of the personal loan process involves prequalification – where a lender can provide an estimate of your qualifying rates and terms based on a soft credit check. As always, this soft inquiry won’t affect your credit score.

While not 100% accurate, getting prequalified for a personal loan can tell you and your lender whether your finances suggest you’re up for repaying a loan on time.

If you proceed with your personal loan application after prequalification, you must undergo a hard inquiry, which will have some impact on your credit score.

Soft Credit Check Loans Or No Credit Check Loans

While soft pull personal loans are rare, the following loan options can offer no credit check approvals.

• Payday loans: Payday loans typically require no credit inquiries of either kind but require that you repay your loan by the date of your next paycheck. High interest rates and rollover fees may make you think twice about going with this type of lender.
• Title loans: A car title loan lender may forgo a credit inquiry but take the title of your vehicle as collateral. Like with payday loans, high interest rates and fees can trap you in a debt cycle. What’s worse? You may lose your car if you can’t make your payments.
• Pawn shop loans: As with title loans, pawn shop loans take collateral in place of doing a credit check. Pawn shop loans also have high interest rates, and you risk losing whatever you put up for collateral.
• Family loans: Personal loans between family members can have more lenient credit requirements, as the family member lending the money can choose if they want to do a credit check and whether it’d be a soft or hard inquiry. Paying back a family loan, however, won’t have any boosting effect on your credit score, since the loan is processed without the involvement of credit bureaus or other financial institutions.

Rather than taking a risk on these no credit check loans, many borrowers prefer taking steps to improve their credit score for the next time they need a soft credit check.

For more information on soft credit checks, take a look at questions other people are asking.

Does a soft credit check affect my credit?

No, it doesn’t. That’s the reason it’s called a “soft” inquiry, as opposed to a “hard” one. When taking out a personal loan or applying for a mortgage or credit card, a credit check normally impacts your score. A soft credit check occurs when you’re not accessing any money or credit (like when browsing potential loan offers), so the inquiry has no effect on your overall credit score.

This goes for doing your own credit score check, too.

Can I see soft inquiries on my credit report?

Yes, on your credit report, you can view any of the soft inquiries that have been pulled. Through the end of 2023, you can request a free copy of your credit report once a week from each of the three major credit bureaus: Experian™, Equifax^® and TransUnion^®. Your soft credit checks will be visible on these reports.

How long does a soft credit check stay on my record?

Soft credit checks can stay on your credit report for 12 – 24 months. That means, in the case where a soft credit check remains on your credit report for 2 years, it may appear there for as long as a hard credit pull. While a soft inquiry won’t affect your credit score, it’ll be visible on your report in the short term. This is because the Fair Credit Reporting Act (FCRA) requires credit bureaus to communicate on your report every inquiry that’s been made and keep inquiries visible for a certain amount of time.

A soft credit check informs you and a lender how much you can comfortably afford to pay back in light of your financial situation. This credit check will have no effect on your credit score and can sometimes occur without you even knowing, as in the example of a credit card offer versus a credit score-affecting hard inquiry. When seeking preapproval or prequalification, it’s commonplace to have multiple soft credit checks run while rate shopping for the best deal.

Want to see your prequalified rates for a personal loan? Get an application started today with Rocket Loans℠.