How a Soft Credit Check May Affect Your Credit Score

It’s a common myth that a soft credit check will ding your score. While it might seem like any peek at your credit history would have an impact, these inquiries are invisible to lenders and have no effect.

1. The Soft Inquiry: The process often begins when you check your own credit or get pre-qualified for a loan. This triggers a soft inquiry, which is not visible to lenders and does not affect your score.

2. The Formal Application: Based on pre-qualified offers, you decide to formally apply for a new line of credit. This step signals your intent to take on new debt and requires your explicit permission to proceed.

3. The Hard Inquiry: With your authorization, the lender performs a hard inquiry. This is a deep dive into your credit history that gets recorded on your report and is visible to other potential lenders.

4. The Score Impact: A hard inquiry can cause a small, temporary dip in your credit score. While a single inquiry is minor, multiple hard inquiries in a short period can have a more significant negative effect.

How Much Will a Soft Credit Check Affect Your Credit Score?

A soft credit check will not directly lower your credit score. However, there are a few key things to keep in mind regarding these inquiries and what they signify.

• No Score Reduction. Soft inquiries do not impact your credit score at all. Lenders cannot see these checks, so they won't affect any future credit applications you might make.
• Unlimited Checks. You can have numerous soft inquiries without any penalty to your credit standing. This allows you to monitor your credit report frequently without concern for score drops.

How You Can Avoid a Soft Credit Check Affecting Your Credit Score

Differentiate Between Inquiry Types

Soft inquiries, such as checking your own score or receiving pre-qualified offers, do not impact your credit score. They are informational. Hard inquiries, made when you apply for a loan or credit card, are the ones that can temporarily lower your score, so distinguishing them is key.

Be Strategic with Applications

To protect your score, limit how often you formally apply for new credit, as each application typically triggers a hard inquiry. Spacing out applications for loans or credit cards prevents multiple hard pulls from negatively affecting your credit profile in a short period of time.

Monitor Your Credit Report

Regularly review your credit report from the major bureaus. This allows you to see all inquiries, both soft and hard. Monitoring helps you understand your credit activity, verify that all inquiries are legitimate, and see how your actions affect your financial standing over time.

Choose the Right Card to A Soft Credit Check

No matter your current standing, improving your credit score is an achievable goal that can significantly impact your financial life. With consistent, positive financial habits, most people can see meaningful changes and boost their creditworthiness.

• Monitor your credit reports. Regularly check your reports from all three major bureaus for inaccuracies or signs of identity theft, which you can dispute to protect your score.

• Set up automatic bill payments. Your payment history is the most significant factor in your score, so ensuring every bill is paid on time is a critical step.

• Reduce your credit utilization. Aim to use less than 30% of your available credit, as high balances can negatively impact your score.

• Become an authorized user. Being added to an account with a long history of on-time payments and low utilization can help improve your own credit profile.

• Limit new credit applications. Applying for too much credit at once results in multiple hard inquiries, which can temporarily lower your score.

• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as installment loans and revolving credit cards.

The Bottom Line

A soft credit check, unlike a hard inquiry, will not impact your credit score. This allows you to check your own credit or get pre-approved for offers without any negative effect.

Frequently Asked Questions

Do soft credit checks show up on my credit report?

Yes, soft inquiries are recorded on your credit report, but they are only visible to you. Lenders and other third parties cannot see them.

Can too many soft inquiries hurt my credit?

No, the number of soft inquiries has no impact on your credit score. You can have unlimited soft checks without any negative effects on your rating.

Who can perform a soft credit check?

Soft checks are often used by potential lenders for pre-approvals, employers for background checks, or by you when checking your own credit score online.