Does Soft Pull Affect Credit Score?

How Does a Soft Pull Impact Your Credit Score?

If you need a loan or credit card, the lender will likely pull your credit report to decide whether or not to approve you. This is also referred to as a credit pull or credit inquiry. It is important to know that your credit report contains records of credit inquiries every time a business retrieves your report.

There are two main types of credit inquiries - soft pulls and hard pulls

Difficult Questions Usually, a hard inquiry results from your credit card or loan application. Credit applicants blame hard inquiries. Among them are applications for credit cards, mortgages, auto loans, and student loans.

Your score suffers a few points after a thorough investigation. Your credit score will be deducted a few points each time you let a business run a rigorous credit check. However, according to FICO research, those who answered six or more questions in the previous six months may be more prone to have more significant decreases.

Many quick queries might be seen as higher credit risk by possible lenders. Desperate, it would seem as if you are seeking fresh credit accounts. This will worry the lenders about your potential difficulty fulfilling additional debt commitments going forward.

Although hard inquiries show on your credit record for 24 months, they only influence your score for one year. Their negative effect on your score will progressively fade in the next year until they are off the credit record entirely.

Gentle Inquiries Conversely, when one reviews your credit report but does not do a thorough investigation, a soft inquiry results. Though they do not affect your credit score, soft inquiries are noted when you review your credit report.

Below are some examples of soft inquiries.

• Prescreened credit card offers – While a lender may pull your credit to send prescreened offers, they only make a soft inquiry to determine your existing credit and outstanding debts.
• Potential employers – Employers can pull your credit report but they usually do a soft inquiry which does not lower your credit score.
• Yourself – When you get credit reports to confirm mistakes, it does not cause credit checks, therefore, no hard inquiries. Unlike many other credit checks that are initiated by the credit reporting company, this soft check carried out by the consumer does not reduce your score.
• Insurance providers - Some car insurance companies use the credit score as a raw material to evaluate the risk level and set the right premium. These soft checks do not affect credit scoring.
• Existing creditors – your current creditors can review your credit report for material changes in your behavior but will perform a hard credit check only when you apply for a new credit.

While hard inquiries can only be made with your consent, soft inquiries can be made by other people without you knowing it. Soft credit checks enable lenders, insurers, or employers to run a credit check on you without any impact on your credit score.

Here’s what you need to know regarding soft checks: Soft credit checks do not affect your credit report or score in any way possible. They show that someone has pulled your credit report but suggest that you have not shopped around for credit. In contrast, soft pulls are completely visible and can be easily tracked, but do not have any impact on credit scores.

Moreover, soft checks do not affect one’s future loan and credit card eligibility in any way. They do not record their footprints on your creditworthiness for a long time or forever and ever. Soft credit check records remain on the credit report for 24 months but are tagged differently from the hard credit checks conducted by lenders.

HARD inquires show that you are borrowing and as such must have an impact on your score. On the other hand, soft checks refer to rate shopping, pre-approval, or account review processes that do not involve incurring new credit. There are no other sources of credit that would cause score declines from soft inquiries alone if there is no new debt.

How Many Soft Check Overs Are Too Many? Soft credit checks do not have a specific number beyond which they will cause a decline in your credit rating. No exact enumeration of soft inquiries can harm your credit score or complicate loan approvals in the future. Ten soft inquiries are the same as one soft check – zero effect!

Soft checks just tell that you have looked for the best rates, allowed prescreened offers to come to your mailbox, or allowed the existing lender to look at the changes in your credit details over time. None of these actions have any adverse effects on your credit score or are otherwise damaging to your credit rating.

Nonetheless, one thing that would be a cause for concern for the lenders would be several soft checks done within a specific time. For instance, if six different auto dealers and four mortgage lenders pulled your credit report in two days, underwriters may conclude that the shopping was risky borrowing. However, several soft checks within a year or random reviews by creditors will not attract attention.

Are soft inquiries possible to delete from credit reports? Soft inquiries remain on your credit report for 24 months from the time they were done. However, they fade away once that time is up. The Fair Credit Reporting Act simply means that you cannot compel the deletion of genuine soft inquiries until the two-year period elapses.

Creditors require a clear picture of all the requests for your creditworthiness over time, including even soft credit checks that do not pull ‘hard’ credit reports. When you display the full inquiry record, the creditors can know how frequently one shops for loans and cards or to be pre-approved.

However, if you find soft inquiries by lenders that you are not familiar with, you can file a dispute to ask for their removal with the credit bureaus. For example, if you have never contacted any student loan company but you come across their soft check, you should report this as fraudulent.

Fraudulent or incorrect soft pulls can get deleted if the credit reporting dispute is initiated with Equifax, Experian, or Transunion bureaus.

The Takeaway A soft credit check lets entities like potential lenders access your credit report without any impact on your credit scores. These inquiries are invisible spectators listed on the credit report but excluded from the scoring process. Soft checks are executed frequently by consumers who are shopping for the best rates, those who receive credit card offers, or those who allow their accounts to be reviewed. Soft inquiries in contrast to hard pull for closed loan and card applications will never reduce the credit score.

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