What Is a Soft Credit Check? Definition and How It Works

What Is a Soft Credit Check (Soft Inquiry)?

A soft credit check is an inquiry into your credit report initiated either by you or a company even if you didn’t apply for credit. It is primarily used to screen for preapproval financing offers or for a background check. A soft inquiry does not affect your credit score, which is a numerical representation of your creditworthiness that creditors use to determine if they should extend credit to you.

How a Soft Credit Check Works

Financial institutions and creditors may want to know whether you are managing your debt and credit history effectively. Creditors might also want to know information such as the number of late payments or your credit usage, such as how much you have borrowed on each loan or credit card.

A soft inquiry—also called a soft pull—allows a creditor to review your credit report and credit score to get a sense of how well you are managing your credit. It can provide them with an indication of how risky of a borrower you are.

A soft credit inquiry can occur when you check your own credit report. Below are some of the most common examples of soft inquiries:

• A potential employer checks your credit.
• Financial institutions that you do business with checks your credit.
• Credit card companies that want to send you preapproval offers check your credit.
• You apply for a preapproval for a loan or mortgage.

Soft Inquiry vs. Hard Inquiry

A hard inquiry or hard pull, happens when you officially apply for credit, such as by filling out a credit card application. Hard inquiries also occur when you apply for a mortgage, an auto loan, or any number of other financial products that extend you credit.

Hard pulls can harm your credit score for a few months and may stay on your credit report for about two years.

Credit bureaus factor hard inquiries into your credit score because if you are applying for additional credit, you might be at greater risk of not paying back your existing debts. However, soft inquiries don’t impact your credit score because they are not a formal credit application. So credit bureaus don’t include them in their credit score calculations.

Special Considerations

If you’re concerned about the impact of hard inquiries on your credit score, don’t apply for any loans or credit you don’t need. Also, before you apply for a bank account or cellphone contract, ask if it will result in a hard credit pull. Being cautious about the type of credit inquiry made on your credit will help you maintain better control over your credit score.

If you see a hard pull on your credit report that you don’t recognize, contact the financial institution that initiated it. It could be a sign that someone else has fraudulently applied for credit using your name. It could also be a simple error that you may be able to clear up with the credit reporting bureau.

For additional help spotting mistakes on your credit report, consider using a credit monitoring service such as Credit Sesame or Complete ID.

Benefits of a Soft Credit Check

You can use soft inquiries to better understand how your credit score is reported with the various credit bureaus. One of the best ways to do this is by taking advantage of free credit reports and scores offered through your credit card company.

The Fair Credit Reporting Act (FCRA) regulates how credit bureaus or agencies collect and share your financial information. By law, you have the right to obtain a free copy of your credit report every 12 months from the credit bureaus. You can also get a copy of your report from AnnualCreditReport.com. 

Soft inquiries are listed on your credit report, and they can provide useful information as to what companies are considering extending you credit. They will be found under a subheading such as “soft inquiries” or “inquiries that do not affect your credit rating.” This portion of your credit report will show the details of all soft inquiries, including the requester’s name and the inquiry date.

The Bottom Line

Soft inquiries can provide valuable information without damaging your credit score, but to officially apply for credit you will need a hard credit check. Monitor your credit report regularly to ensure the credit checks, both soft and hard, are accurately reported.