A Soft Credit Check: What It Is, How It Affects Your Credit Score, and How To Perform One

ByJulija A.
June 24, 2022

Maintaining a good credit score is always a good idea, even if you don’t plan on taking out a loan in the near future, as you never know when you might need one. That said, you can conduct a soft credit check to examine your credit eligibility without affecting your credit score. 

Although this inquiry won’t tell you whether you qualify for a specific loan, it can give you a general idea. This way, you can avoid failing hard checks and the harm it would cause to your credit score. 

Now, let’s dive in and take a closer look at soft credit checks and how they are performed

What Is a Soft Credit Check?

There are two types of credit checks: a soft and a hard check. Both soft checks and hard checks are inquiries into an individual’s credit report, and a soft credit check is also referred to as a soft pull or soft inquiry. 

This process is typically carried out by financial institutions or employers. The key difference between a soft and hard credit check is that the former isn’t tied to any particular credit application.

Instances When a Soft Credit Check Is Performed

There are a number of instances when a soft check might be performed. While this process is conducted by a financial institution in most cases, it may also be requested by an individual interested in finding out what their credit score is. 

Soft Credit Check as a Marketing Tool

Some financial institutions do a soft check to create a list of potential customers whom they could market their financial products to. For instance, a bank that offers a particular credit card will offer it to individuals who pass the check. 

Preapproval for a Line of Credit

Some financial institutions allow you to check what financial products you qualify for. For example, you may want to apply for a Capital One credit card. The official Capital One website allows you to fill out the preapproval form to find out what products you’re eligible for.

If a soft pull is performed as a preapproval, it’s usually followed by a hard pull afterward, once you decide on a particular financial product that involves credit.

Previous History With a Specific Bank

If you have applied for a line of credit in a particular bank before, they might offer to perform a soft check instead of a hard pull when you apply for another loan or credit card.

A Soft Check Requested by the Client

You may perform a free soft credit check on your own through one of the three bureaus: Experian, Equifax, and TransUnion. Normally, you’re allowed one such request once a year, but they currently allow one per week. If you need to make additional inquiries, there is a fee involved.

How To Do a Soft Credit Check

Statistics show that one out of five young Americans aged from 20 to 29 isn’t aware of their credit scores. A credit score is calculated using the information found on the credit report, which can be obtained by conducting a soft inquiry. 

If you’re from the United States, you may obtain this information by signing up for a soft check on the Annual Credit Report website. Usually, you may perform one free soft pull per year. 

However, the three aforementioned credit bureaus - Equifax, Experian, and TransUnion - are currently offering free weekly soft inquiries until December 2022. This is their attempt to help individuals in their financial management and ease the effects of the global pandemic, which has had a devastating impact on many people’s finances.

What Does a Soft Credit Check Show?

Simply put, a soft pull shows your credit report, which contains information about your history pertaining to lines of credit and how you handled the payments. 

More precisely, this report typically features personal information, credit account information, credit check information, collection accounts information, and information about bankruptcy filings. 

Needless to say, having an insight into your current credit score can help you take steps to improve it.

Personal Information

The first part of the credit report contains general information about you, which usually includes your full name, date of birth, Social Security number, and home address. Of course, this information doesn’t play any role in determining your credit score, as opposed to all of the other information included in the report.

Credit Account Information

Credit account information covers your credit history, including mortgages, student loans, and other types of credit. This includes the credit account type, when it was opened, the amount that was loaned, and the payment timeline.

Credit Check Information

The credit check or inquiry information pertains to the history of soft and hard pulls that have been performed. As such, any soft inquiry on your credit report will be visible.

Collection Accounts Information

When an individual is late with payments or completely fails to fulfill payment obligations, the debt may be sold to a debt buyer or assigned to a debt collection agency

When this happens, it doesn’t mean that the debt is written off. It’s merely transferred to another entity that will collect it from the debtor. This information also shows up on your credit report. 

Information About Bankruptcy Filings

If you ever filed for bankruptcy, the relevant information will be present on your credit report. This includes the type of bankruptcy and when it occurred.

Does a Soft Credit Check Affect Your Credit Score?

The main concern for those seeking to get a loan is whether a soft credit check can affect the credit score. The good news is that it doesn’t. That’s because this check doesn’t involve a specific credit application, and in many cases, isn’t even requested by the individual whose credit is being checked. 

What Information Is Needed for a Soft Credit Check

Should you decide to perform a soft inquiry, there is some information you’ll need to provide. This information includes the following:

  • Full name
  • Home address
  • Date of birth
  • Social Security number

If this process is taking place online or over the phone, you might be asked for additional information, such as the size of your last loan, so that the company may confirm your identity.

Wrapping Up

To sum up, a soft pull is a type of credit check that doesn’t affect the individual’s credit score. It may be performed at the client’s request, or if a financial institution or employer decides to do so.

FAQ

Do soft checks affect the credit score?

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No, soft checks don’t take points off your credit score, as they don’t pertain to any specific credit application. 

Can you fail a soft credit check?

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Technically, you can fail a soft credit check. For instance, if a financial institution performs a soft pull to check whether they could offer you some financial products, such as certain credit cards, and they find that you’re not eligible, this will stop them from contacting you. However, as mentioned above, this doesn’t reflect negatively on your credit report.

How long do soft searches stay on the credit file?

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A soft credit check stays on your credit report for up to two years. 

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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