A soft credit check refers to an inquiry that does not appear on your lender's credit report. Instead, it appears in your consumer disclosure. Lenders may conduct soft credit checks for many reasons. These include pre-approval screening, account maintenance and employee screening. To determine your eligibility, insurance companies may pull your credit.
An in-depth inquiry
Hard inquiry is when a lender reviews a person’s credit score and credit report to determine whether they can lend money to them. These inquiries usually occur when someone applies to borrow money or get a credit card. All inquiries must be authorized by the consumer.
A person's credit score can be affected by hard inquiries. The exact number depends upon the time since the last inquiry as well as the person's credit history. You should not apply for credit unless absolutely you need it.
Soft inquiry
A soft inquiry provides a comprehensive look at a consumer’s credit history. It can be used to verify identity, or determine the demographics of prospective customers. Each year, consumers can get their credit reports from all three major bureaus for free. When applying for a new loan or creditcard account, your credit history may also be reviewed by creditors and other lenders. Additionally, insurance companies may check your credit to determine if you're eligible for their coverage.
While a hard inquiry can negatively impact your credit score, a soft inquiry is not. Soft inquiries are conducted by lenders when you apply to credit. These inquiries will only impact your Experian credit score and not your Equifax, TransUnion or other credit reports.
Credit score impact
A soft credit inquiry has no impact on your credit score. A soft inquiry serves the same purpose as a hard credit check: to examine your credit report for fraud or errors. The type of information included on your credit report is what makes a soft inquiry different from a hard one. Hard credit inquiries, which are used to determine if you qualify for loans or cards, can have a very negative effect on your credit score. Additionally, lower credit scores mean higher interest rates for loans or credit cards.
Soft inquiries can be triggered by employers, insurance companies, and health care providers. Soft inquiries do not affect your score, but they may appear on your credit report. Griffin stated that consumers could see as many as dozens soft inquiries on credit reports.
Dispute a hard question
If you feel that your credit report may be inaccurate, it is best to immediately dispute the inquiry. This will help you improve your credit score. It is also important to keep clear documentation of your correspondence. You can speak with a specialist at a credit bureau to do this over the telephone. This process can take up to 30 days. After the dispute is resolved, the bureau will take down the incorrect hard inquiry. You may also notify the financial institution responsible for the credit check.
There is no credit score impact on a soft inquiry as opposed to a hard inquiry. Soft inquiries, however, can be made without your authorization. When you apply for credit cards, for example, a creditor company might request a soft inquiry.
Impact of a soft enquiry
Soft credit inquiries are simple, high-level checks of your credit report. It can help lenders verify your identity or determine your demographic for marketing purposes. Each year, you can access your credit reports free of charge from all three major bureaus. Your current lender or creditor may review your credit reports if there are any outstanding credit card bills.
There are several types of soft inquiries. One type is a pre-approval inquiry for a personal loan. A pre-approval inquiry for a personal loan may have been completed. Lenders may also check your credit score when you apply. You won't see any negative effects from either of these types of inquiries.