Soft credit checks (also called “soft pulls” or “soft inquiries”) occur when you or someone you authorize, such as an individual or company, checks your credit report. There are a few common reasons a soft credit check would occur — to prequalify for a loan, for employment background checks, and to check your credit score.
How Do Soft Credit Checks Work?
A soft credit check, in a simple sense, is a quick peek into your credit history done purely for informational purposes. It allows you, or whomever you authorize, to briefly assess how effectively you’ve managed your debt thus far but is not intended to assess your ability to handle a new line of credit.
In comparison, a hard credit check is done when submitting a formal application for new credit. It is intended to assess your ability to manage a new line of credit, and therefore, the inquiry will remain on your credit report and will impact your score temporarily.
Does a Soft Credit Check Hurt Your Credit?
A soft credit check does not hurt your credit score. Soft credit checks are not associated with a potential new debt, and thus, are not factored into your credit score calculation.
Think of it from a lender’s perspective. Taking a quick peek into your credit score to see where you’re at is fairly harmless. Applying for ten new lines of credit in one month, however, is an indicator that something isn’t quite right.
(Remember, looking at your credit score for informational purposes results in a soft credit check, while applying for a new line of credit results in a hard credit check.)
Your history of soft credit inquiries is, in a way, irrelevant to lenders as it doesn’t provide any information about your ability to manage new credit. Your track record of hard credit checks, however, shows lenders when you’ve requested new lines of credit and for what reasons, which can help them evaluate the potential risk in lending to you. A larger number of hard credit checks can raise a red flag for lenders depending on how close together they are.
Commonly Asked Questions About Soft Credit Checks
Can Lenders See Soft Credit Checks?
Lenders can’t see soft credit checks. While a soft credit check may stay on your credit report, depending on the credit bureau, it will only be visible to you, not lenders.
How Long Does a Soft Credit Check Stay on Your Credit Report?
Both hard and soft credit checks can stay on your credit report for up to two years. However, only hard credit checks will impact your score, and the impact won’t last for the entire two years. Typically, hard credit checks only affect your credit score for a few months (if you maintain your credit otherwise).
How Many Soft Inquiries is Too Many?
There is no threshold for “too many” soft credit checks. However, you should monitor the number of hard credit checks you incur in a year. Generally speaking, it is recommended to keep the number of hard credit checks to less than six per year.
How Can I Check My Credit Score Without Hurting It?
Checking your credit score for personal reasons will result in a soft credit check, and thus, will not hurt your credit score.
Several financial institutions, such as banks and credit card companies, offer free FICO scores as an added benefit of working with them. If yours do not, utilize the Annual Credit Report website to obtain your credit report. By law, you are entitled to a free copy of your credit report once per year from each of the three major credit bureaus.
Does Prequalifying for a Loan Hurt My Credit?
More often than not, prequalifying for a loan will not hurt your credit score as prequalification is often assessed through a soft credit check. That said, some lenders do perform a hard credit check during the prequalification process. Be sure to check with the lender directly before any credit check is performed to avoid unexpected hard credit checks.
When prequalifying for a student loan through Sparrow, a soft credit check is utilized to determine the rates you may qualify for with each potential lender. Using Sparrow will not hurt your credit score.
Final Thoughts from the Nest
A soft credit check will not impact your credit score, but a hard credit check will. Before agreeing to a credit check of any kind, be sure to understand what type of credit check will be performed. Understanding how the two types of credit checks impact your score will help you maintain a score that demonstrates creditworthiness.