What Is a Soft Credit Check?
A soft credit check won't lower your credit score, but it will provide an estimate of the interest rate and APR a lender might offer you.
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A soft credit check is a type of credit inquiry that provides a rough idea of your credit history without affecting your credit score. Your credit score is provided by three different credit bureaus (Equifax, Experian, and TransUnion), which compile information about your creditworthiness.
This type of credit check is particularly relevant if you plan to use an auto loan to help finance a new or used vehicle purchase. Before walking into a car dealership, you can fill out an online application to pre-qualify for the loan, a process that involves a soft credit check.
A soft credit check, or soft pull, is different from a hard credit check, or hard pull, which is done when you want to formally apply for a loan. You only want to allow a hard credit pull when you are ready to apply for a loan, as this type of credit check will affect your credit score.
Understanding what a soft pull is and when to use it is an important step in the car-buying process.
Differences Between a Soft Credit Check and a Hard Credit Check
A soft credit pull is usually initiated by you to unlock more information about your credit. The results will list what information about your financial history lenders will see when you formally apply for a loan. A soft credit pull can result in pre-qualification or pre-approval for an auto loan.
A hard credit pull is used by a lender, with your permission, to check your credit score and get a verified picture of your financial history from the three credit bureaus. These bureaus compile information about your financial history and issue a credit rating that ranges from 300 (poor) to 850 (excellent). Your credit score is based mainly on your financial history and can be influenced by whether you’ve paid your bills on time and the amount of money you currently owe. Your credit score also reflects how long you have maintained your credit history.
A hard credit pull will lower your credit score by less than five points. However, subsequent hard pulls over a limited period (typically 14 to 45 days) will not continue to lower your score. Generally, credit bureaus assume you are shopping for a loan and group separate inquiries together.
Here are the key differences between soft and hard credit pulls:
Soft Pull
- Does not lower your credit rating
- Gives you an estimate of potential loan terms
Hard Pull
- Will temporarily lower your credit rating
- Requires your consent
- Will remain on your credit report for two years (but only affects your score for a year)
Soft Credit Checks Do Not Affect Your Credit Score
A soft pull inquiry is generally not reported to credit bureaus, making it a convenient way to get a heads-up on your credit score. After reviewing your credit score, you then have several options.
If you feel good about your score, you can start applying for a loan and may be able to see an estimate of the interest rate you will qualify for. With this information, you can review your budget and determine the best terms for your loan before moving forward.
If you're not happy with your score, you may be able to improve it by making larger payments to your highest loan balances and fixing any mistakes on your credit report. You can also call your credit card companies and request higher limits (but make sure you don’t also increase your spending). It’s also beneficial to keep your old accounts open, as this adds to the length of your credit history. Finally, you can set up automatic payments for your loan minimums to ensure you never miss a payment.
Do Soft Credit Checks Appear on Your Credit Report?
No, a soft pull does not typically appear on your credit report. Once you get the information you need from a soft credit check, you can more strategically navigate the loan process.
After reviewing your soft credit check results, you can see if you're being offered a competitive rate during the financing process. If the interest rate has been inflated, you can tell the dealer you've already checked your credit and know what rate you qualify for. This might elicit a better offer from the finance officer.
How Do You Know If It Is a Soft Pull?
In some cases, you might be confused about whether your inquiry will result in a soft pull or a hard pull. Look for language in the application form that says something like, "will not damage your credit rating" or "for a soft credit inquiry only." If you still aren't sure, look for the company's FAQ or disclosures for more details.
Also, keep in mind that application forms will vary. Typically, you'll provide the following information for a soft pull:
- Name, address, and date of birth
- Phone number and email address
- Full Social Security number or the last four digits
- Employment status, such as self-employed, employed, or retired
- Annual gross income from all sources
- Length of employment
Sometimes the application will also ask for your employer's name and your occupation.
The Bottom Line
Using a soft credit pull to get pre-qualified for a loan is a useful tool in budgeting. If you're in the early stages of shopping for a loan, look for sites that will show you your credit score and proposed interest rate with only a soft credit pull. Because the hard pull will impact your credit score, it's smart to wait until you are ready to actually apply for a loan before proceeding.
Frequently Asked Questions
Are soft and hard credit checks the same?
No. A soft credit pull will provide you with your credit score and a picture of your financial history without impacting your credit score. A hard credit pull will slightly lower your credit score, but subsequent hard pulls during a limited amount of time will not further damage your credit.
Will a soft credit check affect my credit score?
No. Soft credit pulls do not harm your credit. Later, if you check your credit report, you will see how many soft inquiries you made, but a prospective lender generally does not receive this information.
What information is on a soft credit check?
A soft credit check typically includes personal information, employment history, amounts you have borrowed and the timeliness of payments, and, in some cases, your credit score.
What are some use examples for soft credit checks?
Often, soft credit pulls are used for:
- When you want to check your own credit report before applying for a loan
- Getting pre-qualification for a loan or credit card
- If a lender wants to offer someone a pre-approved credit card
- Providing information to a prospective landlord, employer, or insurance company
Philip ReedPhil grew up fixing lawn mowers, motorcycles and cars. He began his journalism career as a night police reporter in Chicago before transitioning into providing consumer advice, authoring two popular books about car buying and leasing. The automotive site Edmunds hired him to buy and sell the company's test cars, and he later joined NerdWallet and wrote a syndicated automotive column. He recently authored the book Electric Cars: Get Rolling Today. Phil lives in Long Beach, California and still enjoys turning wrenches and helping his son change the oil in his 2016 Mazda3.
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