What is a Soft Inquiry
A soft inquiry is a credit report check that does not affect an individual's credit score. A soft inquiry, also called a soft pull, can occur when an individual checks his or her own credit report, when you give a potential employer permission to check your credit, when financial institutions you already do business with check your credit and when credit card companies that want to send you preapproved offers check your credit.
BREAKING DOWN Soft Inquiry
Soft inquiries and hard inquiries are two types of credit checks that consumers should be aware of when managing their credit. Both types of inquiries are detailed on a consumer’s credit report.
Soft Inquiry versus Hard Inquiry
Hard inquiries, also called hard pulls, occur when an individual applies for credit by filling out a credit card application, applying for a mortgage, applying for an auto loan or any number of other activities that result in a credit decision for the borrower. Hard pulls can have a negative effect on your credit score for a few months and will stay on your credit report for two years. Credit bureaus factor hard pulls into your credit score because they assume that if you are applying for additional credit, you might be at greater risk of not paying back your existing debts. Credit bureaus don’t factor soft pulls into your score since these are inquiries you either didn’t request or that are solely for informational purposes.
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, if you want to open a new bank account or start a new cell phone contract, ask if it will result in a hard credit pull before you apply. Being cautious about the type of credit inquiry being executed will help to maintain better control over your credit score. If you ever see a hard pull on your credit report that you don’t recognize, contact the financial institution that initiated it because 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.
Consumers also have the advantage of analyzing any soft pulls on their credit file. These inquiries will be found under a subheading like “inquiries that do not affect your credit rating.” This portion of your credit report will show the details of all soft inquiries including information such as the requester’s name and the inquiry date.
Soft Inquiry Benefits
Consumers can use soft inquiries to better understand their credit score with various agencies. One of the best ways to do this is by taking advantage of free credit scores offered through your credit card company. Nearly every credit card company offers cardholders a free credit score assessment and each assessment will differ by the reporting agency used. These inquiries are considered soft pulls and can provide you with information on your credit score and credit profile each month.