What Is a Soft Credit Check

<p>A soft credit check is a review of a consumer's credit file that is not connected to an application for new credit. Credit reporting companies categorize inquiries by purpose. When a lender or other business requests a report because a consumer has applied for a loan, credit card, or similar product, the inquiry is generally coded as a hard inquiry. When a report is requested for account monitoring, prescreened marketing, or by the consumer personally, it is generally coded as a soft inquiry. The distinction matters because credit scoring models treat the two categories differently, and lenders see only one of them.</p>

<p>Common examples of soft credit checks include a consumer requesting their own credit report through AnnualCreditReport.com, a credit monitoring service refreshing a file, an existing creditor reviewing an account for potential changes, and a prescreened offer of credit or insurance. Employers may also obtain a consumer report for employment purposes with the consumer's written permission under the Fair Credit Reporting Act; those inquiries are typically recorded as soft. The label depends on the purpose of the request, not on the type of organization making it, and the three national credit reporting companies apply their own coding conventions.</p>

<p>Soft credit checks are visible to the consumer on the credit disclosure they receive from a credit reporting company, and they may remain on that disclosure for a period set by the company. They are not included in the credit reports furnished to lenders for credit decisions, and they are not inputs to widely used credit scoring models. A hard inquiry, by contrast, can appear in reports seen by lenders and may be considered by scoring models for a limited time. Because soft inquiries are excluded from scoring, their presence does not alter a credit score.</p>

<p>The prescreening process relies on soft credit checks. Under the Fair Credit Reporting Act, a creditor or insurer may ask a credit reporting company to identify consumers who meet certain criteria, and the company performs the matching without providing the full report to the requester. Consumers may opt out of prescreened offers. Soft checks also occur when a consumer asks for their own report, and the Fair Credit Reporting Act gives consumers the right to dispute information in their file, including inquiries they do not recognize. Understanding the purpose behind an inquiry helps explain how it is recorded.</p>