Credit Tip Tuesday #50 Soft vs Hard Credit Checks & How it Affects You.

So if you have ever applied for a credit card, limit increase, financing for a new car or even wanted to check on your credit score, you may have been subject to either a soft or hard credit check.

What is a Soft Credit Check?

What does this even mean? To start, soft credit checks do not affect your credit score while hard credit checks do affect it. Soft credit checks are often the subject of pre-approved offers for your account such as a limit increase offer on a credit card or when you even check your credit.

These checks also happen when someone pulls your information on a background check such as a in a job application if they ask for your credit score. These also may occur without your permission as some institutions like the bank will run this to see if you qualify for any pre-approvals as mentioned above. 

As these checks do not affect your credit score, you will only see this when you view your profile and not on any records that the credit bureau can see. 

What is a Hard Credit Check?

Unlike a soft credit check, a hard credit check is when a lender goes in to check your credit and is most commonly found in mortgage applications and applying for a new credit card. While these checks do affect your score, having one or two of these won't result in any significant change to your score. Just be mindful that you aren't running these checks constantly as that is when it may affect your score a bit more.

While this sounds like a little change, be mindful of applying for multiple credit cards you see out there. Sure it can be tempting taking advantage of all the offers you can for signing up for new cards, but this actually may impact your score if you find yourself applying for too many cards. 

Consider spreading out the events also as if you have numerous short term hard credit checks, lenders may see this as a warning for them since it shows that you might be low on cash. 

Will Checking my Score Lower My Score?

Nope, this is actually considered a soft credit check and many applications out there such as Plastk Sentinel will offer constant updates to your credit score for you to view. 

Common Hard & Soft Credit Check Examples

The difference between these two is simple and could be the result of just giving the lender permission to go into your credit file. Hard checks also will have the potential to lower your score while soft checks do not.

Hard Credit Check Examples

• Mortgage application
• New credit card application
• Apartment rental application
• Applying for auto financing
• Student loan application

Soft Credit Check Examples

• Pre approved credit card offers
• Checking your credit score
• Pre approved insurance quotes
• Mobile phone or internet applications

These are some examples of soft and hard credit checks. Be sure to ask the company you are dealing with to make sure the checks they doing are soft or hard credit checks.