what is a soft credit inquiry
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You’ve probably heard before that it’s a good idea to review your credit on a regular basis, but some fear that doing so could hurt their credit scores. This fear can prevent people from finding costly credit report mistakes, and it can keep them from really understanding their credit. Thanks to something called a soft credit inquiry, there’s no need to worry about checking your credit score or reading your credit reports. Read on to learn more about soft credit inquiries and how they really work.

What Is a Soft Credit Inquiry

A soft credit inquiry is a credit inquiry that has no effect whatsoever on your credit scores. There are three different ways a soft credit inquiry can occur:

1. When You Review Your Credit

Anytime you check your credit scores or review your credit reports, a soft credit inquiry occurs. Therefore, you can review your credit to your heart’s content and never worry about it having a negative effect on your credit scores.

2. When a Company You Deal With Reviews Your Credit

As a matter of process, some companies (such as your credit card issuer) might review your credit reports on a regular basis. Since this is a result of their internal policies and not something you’ve asked for, it doesn’t affect your credit.

3. When Financial Institutions Send You Promotional Offers

You’ve probably received a few (or way too many) promotional credit offers in the mail before, especially from credit card companies. When a financial institution prepares these promotional offers, they’re doing so after having checked your credit and deciding that you fit the profile of a customer they might want.

However, just like those companies that review your credit as a matter of their processes, this is an action they take because they want to, not because you asked for it. Therefore, it’s considered a soft credit inquiry and won’t hurt your credit scores.

So, what if you submit a credit application from one of those promotional offers? At that point, you’re opting into having your credit checked to receive new credit, and it will be considered a hard credit inquiry.

The Key Difference: Voluntary Actions

The key to understanding the difference between a hard credit inquiry and a soft credit inquiry is the way you apply for credit. A hard credit inquiry occurs after you voluntarily submit a full credit application, whereas a soft credit inquiry occurs in the instances outlined above.

Read here to learn what you should know about hard versus soft credit inquiries and how to protect your credit scores.

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