When you apply for a new loan, credit card, or other type of financing, the lender will investigate your financial situation to determine whether you’re a suitable candidate. To do this, they’ll look at factors such as your income and existing debt load. In order to keep things objective and transparent, most lenders use soft pull credit checks when reviewing potential applicants.
In general terms, a soft pull is any type of check that doesn’t have an adverse impact on your credit score. This means that if you have excellent credit and want to keep it that way, a soft-pull check is the ideal option. Keep reading to discover more about these types of checks and how they might impact your future applications for financing or other services with lenders.
What Is a Soft Pull Credit Check?
A soft pull credit check is any type of credit check that doesn’t negatively affect your credit score. This means that a borrower can be approved for financing even if they have less-than-perfect credit. If a lender performs a soft pull check, they aren’t able to access your credit report. While a soft pull credit check is often sufficient for routine purposes, a hard credit check may be required if you’re seeking a large amount of financing or have a complicated financial situation.
How Are Soft Pull Credit Checks Different from Hard Pull Checks?
A hard pull credit check actually pulls your credit report and reflects negatively on your credit score. The amount of harm done is directly related to the amount of financing you are seeking. For example, if you’re applying for a $10,000 car loan, there’s a good chance that the lender will perform a hard credit check. Therefore, you’re likely to see a 10% drop in your credit score, which will remain on your report for a period of seven years.
Soft-pull checks, on the other hand, only access a small portion of your credit report. They typically pull your credit report as well, but they’re only able to view information regarding your current credit accounts. As such, they don’t negatively affect your score in any way.
Why Are Soft Pull Credit Checks Important?
If you’re a borrower who has less-than-perfect credit, you’ll want to make sure that you’re applying for loan with a soft pull credit check. When a lender performs a hard pull credit check, they’ll see that you have less-than-perfect credit. This might lead them to deny your application, or to charge you higher interest rates in order to compensate for their increased risk. Soft-pull credit checks, on the other hand, keep your credit score unharmed. This means that lenders aren’t able to see that your credit is less than perfect, and so they’re more likely to approve your application.
iSoftpull is a company that was created to address a widespread problem that wastes time and money on unqualified prospects. Businesses sought an easier way to pre-qualify clients.
Ten years ago, soft pull credit checks were rarely used and little known. iSoftpull’s founders saw the huge benefit this simple-to-use tool provided, so they worked to make it available to businesses of all sizes and in all sectors through software development.
iSoftpull is striving to improve credit reporting in order to help businesses. The company’s employees have spoken with thousands of business owners, and they continue to update the platform in order to provide a solution that addresses the ever-changing market conditions and demands of their customers.
How Can You Benefit from Soft Pull Credit Checks?
If your current credit score is less than ideal, but you’re still in need of financing, you’ll likely have to settle for high interest rates and high-cost financing such as payday loans. If you’re able to secure financing with a soft pull check, however, you’ll be able to avoid paying higher rates. This is because a soft-pull credit check is non-invasive and doesn’t reveal any information regarding your credit history, however poor it might be. A soft-pull credit check doesn’t negatively affect your credit score, so you’ll be able to apply for financing with multiple lenders without penalty. Soft-pull credit checks also make it possible for people with no credit or a poor credit score to secure financing.
Which Loans Require a Soft Pull Credit Check?
Almost all lenders perform hard credit checks. As such, if you’re applying for a car loan, student loan, or other financing with a large amount, your credit score will likely take a significant hit. Soft-pull credit checks are relatively rare, but you can expect to perform one if you’re applying for financing from a credit union. If you’re applying for financing from a bank, you’ll likely have to settle for a hard credit check.
Final Words
Soft-pull credit checks are the best option if you have excellent credit and want to keep it that way. If you have less-than-perfect credit, you should expect to have to perform a soft-pull credit check. While this method of checking your credit score won’t negatively affect your credit score, it also won’t give you a clear picture of where you currently stand. For this reason, it’s important to be aware of your current credit score before applying for financing.
