A soft credit pull, also called a soft inquiry, allows certain information from your credit profile to be reviewed without affecting your credit score. This differs from a hard inquiry, which typically occurs when you formally apply for credit and may cause a small, temporary score decrease. Understanding this distinction can help you check potential loan terms with more confidence.
If you're considering a personal loan, you may hesitate before checking your options because of one question: will this hurt my credit score?
The answer depends entirely on the type of credit inquiry being performed. A soft credit pull can be used in certain situations to review information from your credit profile without affecting your credit score. A hard inquiry, on the other hand, typically occurs when you formally apply for new credit and can affect your score.
Understanding the difference between these two processes can help you know what to expect before you check potential loan terms. It can also help you move past the fear that simply looking at your options will set you back.
A soft credit pull is a review of information from your credit profile that does not affect your credit score. It's a way for you, credit card companies, or a lender, to look at relevant details without triggering the kind of score impact associated with a formal credit application.
Soft inquiries can occur in several situations, potentially including:
The exact information reviewed can depend on the situation, the credit scoring model, and the service being used.
A soft pull allows certain credit information to be reviewed without the score impact associated with a hard inquiry.
No. A soft credit inquiry does not affect your credit score.
This is worth stating plainly, since it's often the exact question that keeps people from exploring their options in the first place. You could check your own credit or use a lender's soft-pull prequalification process, and the inquiry itself would not lower your score.
That said, it's important to understand what happens if you move forward. Later stages of a loan application may involve a hard inquiry, and that step is separate from the soft pull that came before it.
The soft inquiry itself doesn't affect your score, but you should always understand what happens if you decide to move forward with a formal credit application.
Seeing these two processes side by side can make the distinction easier to remember.
|
Soft Credit Pull |
Hard Credit Pull |
|
|
Affects credit score? |
No |
May affect score |
|
Common during prequalification? |
Often, depending on lender |
May vary |
|
Common during formal application? |
Less typical |
Often |
|
Visible to other lenders? |
Generally not as a hard inquiry |
Generally yes |
|
Requires permission? |
Depends on purpose and circumstances |
Generally associated with an application for credit |
|
Used to make a final lending decision? |
May support preliminary evaluation |
Often part of formal underwriting |
Lender processes can vary, so it's reasonable to ask which type of inquiry applies at each stage before you share any information.
The primary distinction for consumers is that soft inquiries don't affect credit scores, while hard inquiries may.
Knowing that a lender offers a soft-pull option doesn't mean your credit will never be checked with a hard inquiry. It's worth understanding the typical progression so you know what to expect at each stage.
Step 1: Explore. You research loan options and lenders.
Step 2: Check Potential Terms. Some lenders may use a soft inquiry to determine potential eligibility or provide preliminary terms.
Step 3: Compare. You review APR, payment, fees, term, and other available information.
Step 4: Formally Apply. If you decide to move forward, the lender may perform a hard inquiry as part of its underwriting process.
Step 5: Review the Final Agreement. Actual approval and final terms depend on the lender's underwriting requirements.
A soft-pull rate check and a formal credit application can be separate stages of the borrowing process.
Prequalification allows you to provide basic financial information so a lender can evaluate whether potential loan options may be available to you. Depending on the lender, this process may use a soft inquiry.
Potential information requested could include:
It's important to understand that prequalification is not guaranteed approval. Potential terms may also change after full underwriting and verification.
Prequalification can provide useful preliminary information, but it isn't the same as final loan approval.
You can't meaningfully compare your current situation with a potential personal loan if you don't know what terms may actually be available to you. General advertised rates can only tell you so much, since they reflect a range rather than your specific circumstances.
The numbers that matter for a real comparison include:
If a lender offers prequalification using a soft inquiry, you may be able to gather this preliminary information without the inquiry itself affecting your credit score.
Preliminary terms can give you more useful information for comparison than relying solely on advertised rates.
There's a common assumption that checking your rate is basically the same as applying for a loan. It isn't necessarily true, and understanding the difference can make the process feel less intimidating.
The progression generally works like this: check, review, compare, decide. Seeing potential terms doesn't automatically mean you need to proceed. If the available terms don't improve your situation, you can simply decide not to move forward.
Exploring potential terms is an information-gathering step, not necessarily a commitment to borrow.
Once you've seen potential terms, the more useful question isn't "did I qualify?" It's whether the terms actually improve your situation. Consider each of the following:
Potential approval isn't enough information to determine whether borrowing makes financial sense. What actually improves is what matters.
Generally, checking your own credit is considered a soft inquiry and doesn't affect your credit score. This is useful to know, since understanding where you're starting can help you evaluate new borrowing options more clearly.
It can help to review:
Monitoring your own credit can be part of responsible financial management, without lowering your score simply because you checked it.
There isn't one universal point value that applies to every hard inquiry. A hard inquiry may affect a credit score, but the impact varies based on the scoring model used and your individual credit profile.
Other factors in your credit report are being evaluated at the same time, which means the same inquiry can affect two different people in different ways. Hard inquiries can also remain visible on credit reports for a period of time, even though their relevance to your score can change over time and by scoring model.
There isn't one universal number of points that every consumer loses from a hard inquiry.
Before you provide any information, it can help to ask the lender or company directly:
A reputable lender should make it clear what stage of the process you're entering and what type of credit inquiry may occur.
These two terms can sound interchangeable, but they describe different stages of the borrowing process. Preliminary eligibility doesn't necessarily mean final approval.
Final approval may depend on:
Terms could also differ from the preliminary information you initially reviewed. Treat prequalification as useful information rather than a guarantee of final approval or terms.
If your current credit card strategy isn't producing the progress you'd hoped for, it's natural to wonder whether another approach could improve things. But that comparison can't be made using hypothetical numbers alone.
Where available, a soft-pull prequalification process may help answer a specific question: what could another option actually look like for you? From there, you can compare that information against your current situation.
Current Situation
Potential Option
From there, ask whether anything meaningfully improves. The purpose of checking potential terms is to gain information you can use to make a more informed decision.
This framework can help you organize your thinking as you move from research to action.
Checking, comparing, and formally applying can be distinct stages of the decision process, and treating them that way can help you move forward with more confidence.
A soft credit pull is a review of information from your credit profile that doesn't affect your credit score. It's commonly used for prequalification, preapproval offers, and checking your own credit.
No. A soft credit inquiry does not affect your credit score, regardless of how many times it occurs.
A soft pull doesn't affect your credit score and is often used for prequalification or preapproval. A hard pull is typically associated with a formal application for credit and may affect your score.
If a lender uses a soft inquiry to check your potential rate, that step alone does not affect your credit score. A hard inquiry would only occur if you move forward with a formal application.
It depends on the lender. Many lenders use a soft inquiry for prequalification, which does not affect your credit score, but it's important to confirm this with each lender directly.
Yes, where a lender offers a soft-pull prequalification process, you may be able to check potential rates without the inquiry itself affecting your credit score.
No. Checking your own credit report or score is generally considered a soft inquiry and does not affect your credit score.
A hard inquiry typically occurs when you formally apply for credit, such as submitting a full loan application, rather than during initial prequalification.
No. Prequalification provides preliminary information about potential eligibility, while approval depends on further verification and underwriting.
Yes. Prequalification is an information-gathering step, and you are not obligated to accept a loan simply because you checked your potential terms.
Exploring your borrowing options doesn't always require jumping immediately into a formal application. When a lender offers prequalification using a soft credit inquiry, you may be able to review potential loan terms without the inquiry itself affecting your credit score. That can provide useful information for determining whether another repayment approach deserves consideration.
Understanding the distinction between prequalification and formal application is important. Ask what type of credit inquiry will be used, when a hard inquiry may occur, and whether the terms you're reviewing are preliminary.
Most importantly, don't focus only on whether you're eligible. Compare the potential APR, monthly payment, fees, repayment term, and total projected cost with what you're already paying. Checking your options gives you information. What you do with that information is still your decision.
Disclaimer: The information provided in this blog post is for educational and informational purposes only and should not be considered as financial, legal, investment, or tax advice. Symple Lending is not responsible for any financial outcomes resulting from following the information or ideas shared in this blog. Every individual's financial situation is unique, and we strongly encourage readers to take their own circumstances into consideration and consult with a qualified financial, legal, tax, and investment advisor before making any financial decisions. Symple Lending does not provide financial, legal, tax, or investment advice.