Does Soft Credit Check Affect Credit Score?

How Does Soft Credit Check Influence Credit Scores?

Lenders, when you are applying for a loan, credit card, or even an apartment, will pull your credit report to evaluate how much of a credit risk you may pose. These types of credit checks are referred to as ‘hard’ credit checks. Hard inquiries reflect negatively on your credit score especially if they are performed within a short period. However, there is another type of credit check known as the ‘soft credit inquiry’ which does not in any way have an impact on your scores. In this article, we will define what a soft credit check is, give examples of when you might have one done, and why it does not hurt your credit.

What is a Soft Credit Check?

Soft credit check soft credit pull or soft credit inquiry means that one has checked your credit score without the scores being affected. Soft checks are usually carried out by you, for instance, when you request a credit report and get a copy for yourself. They may also be requested by creditors, landlords, insurers, or employers when they wish to look at your credit for purposes of an application or account consideration.

Soft checks are quite unlike hard inquiries, as they cannot be seen to be recorded on credit reports that other entities can access. For this reason, they are not capable of influencing your credit scores in any way. Soft inquiries also do not impact your ability to qualify for new credit, whether mortgage, auto, or personal loans.

Summary of Soft Credit Checks

There are many instances when creditors or third-party companies may review your credit via a soft check without affecting your scores, such as.

Pre-approved credit card offers: When you get offers such as mail with a title saying ‘you have been pre-approved for a credit card’ the bank has only pulled your credit report gently or softly. To accept the offer would necessitate a tough check.
Annual credit card account reviews: Your credit card company may occasionally check your reports to know if it is suitable to raise your credit limit. This soft check by itself does not enable them to reduce your limits.
Using a credit monitoring service to track your credit: The three main credit reporting agencies (CRA) are Experian, Equifax, and TransUnion and each of them permits regular checking of your reports through websites like freecreditscore.com and Credit Karma without damaging your credit profile with hard inquiries.
Potential employer background checks: Your credit could be a factor in the hiring process, but the soft inquiry does not have an impact on your credit. They cannot refuse you a job legally if the only reason they have is your credit.
Renting an apartment: Soft checks can also be used by landlords to perform background checks on the applicants interested in their properties during the tenant selection process without the credit check results being reported to other creditors.

But in such soft credit check scenarios, you are not necessitated to lend direct permission. It is legal for creditors to access your credit reports to make credit decisions without affecting your credit scores for a specific period.

Why Soft Checks Are Not Indicated in Your Credit Rating?

The primary explanation why soft credit inquiries do not affect your scores is their failure to be reported in your credit report, which lenders use. Soft checks are maintained on different reports termed as the ‘consumer reports’ by the major credit bureaus For instance, Equifax, Experian, and TransUnion They can however, not be viewed by regular creditors records of soft inquiries made on their behalf.

Soft checks are not reflected in your scores with any of the three credit reporting agencies, namely Experian, Equifax, and TransUnion, and therefore are not included in the credit score computation. FICO or Vantage scores take into account only new accounts, your payment history, the amounts you owe, how long your credit history was active, and the number of hard checks as opposed to soft ones.

This would make so much sense if you would try to think about it. In the same context, accepting pre-approved credit offers involves a hard inquiry while monitoring one’s reports does not imply assuming new credit risk. Employers and landlords also have legitimate business purposes to review your credit without precluding you from accessing loans. Insurance providers may also use soft checks to extend policy discounts to the consumer although the provider does not get to charge more for creditworthiness problems.

How Many Soft Checks Can Be Done?

On the bright side, there is no set number of soft credit checks that one cannot have in their lifetime. The problem with having too many of them is that since they are not monitored in the same manner as hard inquiries, they will never cause your credit scores to dip. Soft inquiries can be made on credit reports by both individuals and creditors as many times as possible without any consideration of the credit score.

However, some of these individual creditors such as banks or credit card companies may have certain rules that limit the frequency of conducting soft checks on certain accounts. It might be that unlimited favorable soft inquiries as reviewing you for credit line increases are acceptable, but too many allowing decreases could violate consumer protection laws regarding account downgrades. However such limits are more in the sense that one cannot be harassed by a particular company rather than protecting credit ratings.

Regarding the total amount of hard credit inquiries during the 12 months for which scores begin to decrease, most experts suggest that it is best to remain at 6 and below 12 for fair to good chances of credit approval. Of course, a single new hard inquiry under normal circumstances affects scores only a few points at most until paid back on time. Recent multiple account openings or high credit use was significantly more costly.

Soft Check Benefits and How to Use

Because soft credit checks do not impact your important credit scores, some major benefits include.

Accept any offer of new credit or extension of credit line without extra charges.
As for yourself, you can monitor your credit reports from bureaus as frequently as a weekly basis without any impact on your scores.
Examine how aggregator sites provide an opportunity to compare personalized loan and credit card rates with low risks of submitting an application
Allow landlords and employers to check your credit when applying for a rental or a job with no credit score drop.

Soft checks mainly aid in credit reporting and shopping. It is advised to review your credit reports at least once a year through annual credit reports. com and free sources that make soft inquiries every month to correct any inaccuracies before submitting a new credit application.

Usage tips include:

However, soft-check pre-approvals indeed indicate higher rates unless you can negotiate.
If you have been denied, ensure that the information provided by the tenant or employment credit screening was accurate.
Allow monitoring alerts of new accounts and active inquiries to quickly identify fraud.
Get loan estimates regularly but limit loan applications by hard credit checks only when necessary

Soft checks are a better way of getting a credit product or even reviewing one’s records without suffering any repercussions. You simply need to be sure to review your credit reports thoroughly first and find out the rates that are currently available before submitting full application forms. Using soft checks to monitor credit scores can also be useful in managing debt and usage prudently.

Summary

It also permits checks of your credit reports by you, the creditors, and third parties without any limitation and without impacting your all crucial credit scores. Soft inquiries include pre-approved credit offers, account reviews by banks or other financial institutions, your check on your credit report, background checks of employees, estimates of insurance premiums, and landlord-tenant checks. Such credit checks have no bearing on your chances of obtaining new credit now or at some other time in the future. However, hard credit inquiries such as those done when applying for loans or credit slightly reduce your scores for up to one year. The best approach to monitor and safeguard your credit health, in the long run, is to perform regular soft credit checks on your credit reports while refraining from using hard checks.

Ready to boost your credit score? Call +1 888-804-0104 now for the best credit repair services near you! Our expert team is here to help you achieve financial freedom and improve your credit. Don't wait—get started today!