A soft credit check is a preliminary look at your financial history conducted by a lender or creditor. It’s typically a pre-approval step when you apply for a loan or a line of credit. This inquiry does not impact your credit score.
Let’s explore the definition of soft credit checks and key topics to set you up for financial success.
What Is a Soft Credit Check? Definition & FAQs
What is a soft credit check? By definition, it’s a preliminary review of your credit report rather than a full or hard review. It occurs when a lender or financial institution checks your credit history to pre-approve you for a loan or credit offer. Also called a soft inquiry or soft pull, this kind of credit check does not take any points off your credit score.
Soft credit checks are commonly used in various financial situations, including:
- Pre-qualification for loans
- Credit card pre-approval
- Background checks for employment
- Insurance quotes
Checking your own credit report is also a form of a soft credit check.
Will a Soft Credit Affect My Credit Score?
One of the most common questions about soft credit checks is whether they impact your credit score. Not only do they have no impact on your credit score, but you can have multiple soft inquiries on your credit report without any negative consequences. Soft credit checks have no impact on your creditworthiness.
What Is the Difference Between Soft and Hard Credit Checks?
While soft credit checks don’t affect your credit score, hard credit checks do. Here are the primary differences between the two types.
Soft credit checks:
- Do not lower or raise your credit score
- Can be done without your explicit consent
- Can only be seen by you on your report
- Are usually used for pre-qualification purposes
Hard credit checks:
- Can temporarily lower your credit score
- Require your authorization
- Can be seen by potential lenders
- Are part of formal application processes
Knowing when soft or hard credit checks are performed can help you strategize your approach when applying for loans or credit.
Soft credit checks are typically performed in the following situations:
- When shopping around for loans and you want to get an idea of what rates you might qualify for without filling out a full application
- When credit card companies determine if you’re eligible for an offer
- When insurance companies provide you with quotes
- When existing creditors check to see if you still meet their criteria
- When you check your own credit score
Hard credit checks occur when you officially apply for credit or in other situations. This includes mortgage loans, credit cards, new utility services, financing, or increasing your credit limits.
Keep in mind that, in some cases, what begins as a soft inquiry can turn into a hard inquiry. For example, if you proceed with a formal loan application after you’re pre-approved, the lender will probably perform a hard credit check at that point.
Read more about how hard credit checks work.
How Can I Check My Credit Score?
Keeping an eye on your credit rating is an important part of maintaining good financial health. These are some of the most common ways to check your credit score:
- Credit Monitoring Services: Tools like Credit Wise offer free credit score monitoring.
- Credit Card Issuers: Many credit card companies now offer free scores to customers.
- Annual Credit Reports: You’re entitled to one free report per year from each of the three major credit bureaus.
What Gets Pulled In a Soft Credit Check?
A soft inquiry typically includes:
- A high-level summary of your credit accounts
- A summary of your payment history
- Your overall credit score
Is a Soft Credit Check Reliable?
Yes, soft credit checks offer a reliable snapshot of your creditworthiness. However, they are not as detailed as hard credit checks.
How Long Do Soft Credit Checks Stay on Your Report?
Soft inquiries remain on your credit report for about 24 months but are only visible to you and not to potential lenders.
How Many Soft Credit Checks Is Too Many?
There is no limit to the number of soft credit checks you can have. You don’t need to worry about having too many.
Should I Worry About a Soft Credit Check?
No, you don’t need to worry about soft inquiries. They can actually be helpful in understanding your credit health. Only you can see soft checks on your report, and they don’t affect your score.
Can You Fail a Soft Credit Check?
You can’t technically “fail” a soft credit check by definition, but the results could show a lender that you don’t meet the criteria for a particular pre-qualification offer.
Secure a Loan With Power Finance Texas Without a Credit Check
Soft credit checks allow you to explore financing options without risking damage to your credit score. This can help you make smarter decisions about how to manage your credit health effectively and when to apply for loans and additional credit.
Power Finance Texas aims to make loans accessible to everyone, regardless of credit history. Our no-credit-check policy is one way we make borrowing easier for everyone on their journey to financial stability. For help maintaining your financial health, apply for a loan with Power Finance Texas today!