What’s the difference between soft and hard credit checks?

Learn the difference between soft and hard credit checks

In this article, you will find out all the information about soft and hard credit checks. Here you will discover the most important details. Keep reading to find out all the details!

In this article, you will find out all the information about soft and hard credit checks. Here you will discover the most important details. Keep reading to find out all the details!

You are probably aware that when you apply for a loan or credit card, the potential creditor checks or ‘pulls’ your credit report and score. But did you know there are other situations, like a prospective employer reviewing your credit report, that also registers as a credit check? Here’s what you need to know about the two types of credit checks and the different ways they affect your credit score.

A hard credit check is when a lender pulls your credit report because you’ve applied for new credit, such as a credit card, a car loan, a home loan, or an increase to an existing line of credit. Hard credit checks can affect your credit score because seeking new credit can make you seem like more of a risk to lenders, who may worry about your ability to pay back the debt.

A hard credit check is when a lender pulls your credit report because you’ve applied for new credit

Here’s the good news: For many people, the damage from hard checks is minor, usually less than five points off your credit score. One or two credit checks will not significantly harm your credit.

Don’t let concern about credit checks keep you from shopping around for the best deal on auto loans, student loans or mortgages. Hard credit checks that occur for specific items like these, and that happen within a certain time frame—FICO calls them shopping periods—are usually treated as a single inquiry. While each lender may use a different formula to calculate a shopping period, it’s typically 14–45 days.

A soft credit check is when your credit report is pulled but you haven’t applied for credit. For example, Insurance companies or potential landlords may look at your credit report to assess risk; potential employers may do background checks. Credit card companies can also pull a soft copy of your credit to service and manage any existing relationships you may have with them. Soft checks do not affect your credit score or show up on your credit report.

A soft credit check is when your credit report is pulled but you haven’t applied for credit.

To keep your credit score healthy, avoid hard checks when you can. Try to say no to those store credit cards offered to you at checkout if they don’t make sense in your larger financial picture. If you rate shop for a car, student or home loan, it’s best to keep it within a 14- to 45-day window so multiple credit checks are recorded as one. Also keep an eye on your credit report. If you see a hard check you did not initiate, take action to protect yourself from identity theft.

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