For those of you who are new to the world of personal finance, utilize a soft pull or soft inquiry to your advantage. If you don’t know what a soft pull is, it is simply an individual credit report check that doesn’t affect your credit score.
You might be wondering when you would ever come across a soft inquiry or soft pull. Well, the most common occurrence comes when a potential or current employer is given permission to check your credit. Also, when financial institutions you already do business with checks your credit, they can send you preapproved offers based on your credit.
Read a more in-depth explanation about soft pull below. We’ll go over what it is and compare it to a hard pull. If you want a more in depth comparison between a soft pull and hard pull, check out our other post!
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Soft Pull Vs. Hard Pull
First, let’s start off with the hard inquiry, also known as a hard pull. A hard pull occurs when someone applies for credit by filing out a credit card application, applying for a mortgage, applying for an auto loan or any number of other activities that result in a credit decision for the borrower.
Keep in mind that hard pulls can harm your credit score for a short period of time, usually for a few months, and will stay on your credit report for two years.
Credit bureaus will assume that because you are applying for more credit, that you won’t be able to pay them all back. In contrast, these bureaus don’t factor soft pulls because you either didn’t request the scores or the scores are solely for informational purposes.
To avoid any hard pull on your credit score, don’t apply for any additional credit or loans you don’t need. Whenever you’re planning on opening a new bank account or another big financial commitment, it is important you ask to see what type of inquiry is being applied. This will help you have better control of your credit.
Additionally, consumers have the advantage of analyzing any soft pulls on their credit file. To access these inquiries, simply head to the subheading titled “inquiries that do not affect your credit rating.” This portion of your credit report will show the details of all soft inquiries with additional information such as the requester’s name and inquiry date.
Benefits of Soft Pull
Consumers tend to use soft pulls to understand their credit score with various financial institutions better. A way to do this is by taking advantage of free credit scores offered through your credit card company.
A majority of credit card companies nowadays offer to their cardholders a free credit scores assessment, and each evaluation will differ by the reporting agency used. These inquiries are considered soft pulls, so your credit score won’t be damaged.
With the free credit score report, you will learn valuable information on your credit score as well as your credit profile each month. With soft pulls, your credit scores won’t be impacted in any negative way. The scores are generated by analyzing information from your credit report.
Simply put, soft pulls or soft inquiries do not affect your credit score and occur when you simply want some information. An authorized user, such as an employer, can request a credit check or you can request it through your financial institution for no affect on your credit.
Just keep in mind that whenever you decide to make a big financial move, such as applying for a credit card or a loan, read the terms and conditions to make sure there isn’t hard pull. For more information on Soft Pull and Hard Pull, check out our listings!