Soft Credit Check

A soft credit check, also known as a soft inquiry or soft pull, is a review of a consumer's credit report that does not result from an application for new credit. It is recorded on the credit report but is not factored into the credit-scoring models that lenders commonly use to evaluate applications. Soft checks occur in a variety of situations: an existing creditor may review an account to monitor for changes, an employer may check a report with written permission, an insurer may review a report in states where that is permitted, or a consumer may request their own report from a centralized source. These inquiries are typically visible only to the consumer and are not shared with other lenders. The distinction between a soft credit check and a hard credit check is important for understanding credit reporting mechanics. A hard credit check takes place when a lender or creditor reviews a credit report as part of a consumer's application for a specific credit product, such as a mortgage, auto loan, student loan, or credit card. Hard inquiries are visible to other lenders and are considered by many credit-scoring models. Soft inquiries, by contrast, are not visible to other lenders and are generally ignored by scoring models. The Fair Credit Reporting Act (FCRA) governs how credit reporting companies must handle inquiries and requires that consumers be able to obtain their own reports without triggering a negative effect on their creditworthiness. Several types of organizations may perform soft credit checks. Existing creditors often conduct account reviews to determine whether to adjust credit limits or offer new products. Debt collectors may review a report to locate a consumer. Employers may request a report for employment purposes, but only with the consumer's written consent. Insurance companies may use soft checks for underwriting in some jurisdictions. Government agencies may also request reports for specific purposes, such as verifying eligibility for benefits or licenses. Additionally, pre-screened credit offers are based on soft inquiries, where a creditor obtains a list of consumers who meet certain criteria from a credit reporting company. Soft credit checks are reported on a consumer's credit file, but their visibility is limited. When a consumer obtains a copy of their credit report, they will see a section that lists soft inquiries, often labeled as inquiries that do not affect the credit score. These entries may include the name of the requester and the date of the inquiry. They typically remain on the report for a period of time, but because they are not used in scoring, they have no impact on a consumer's ability to obtain credit. The FCRA gives consumers the right to a free copy of their credit report from each of the national credit reporting companies once every twelve months, and that report will include soft inquiries. Consumers can also request reports from AnnualCreditReport.com, the centralized source authorized by federal law.

A consumer who requests their credit report from AnnualCreditReport.com triggers a soft credit check, which appears only on the report they receive and is not visible to lenders or used in credit-scoring models.