Soft vs. hard credit checks: What’s the difference?

You are probably aware that when you apply for a loan or credit card, the potential creditor checks or ‘pulls’ your credit report and score. But did you know there are other situations, like a prospective employer reviewing your credit report, that also register as a credit check? Here’s what you need to know about the two types of credit checks, and the different ways they affect your credit score.

A soft credit check is when your credit report is pulled but you haven’t applied for credit. For example: Insurance companies or potential landlords may look at your credit report to assess risk; potential employers may do background checks. Credit card companies can also pull a soft copy of your credit to service and manage any existing relationships you may have with them. Soft checks do not affect your credit score or show up on your credit report.

To keep your credit score healthy, avoid hard checks when you can. Try to say no to those store credit cards offered to you at checkout if they don’t make sense in your larger financial picture. If you rate shop for a car, student or home loan, it’s best to keep it within a 14- to 45-day window so multiple credit checks are recorded as one. Also keep an eye on your credit report. If you see a hard check you did not initiate, take action to protect yourself from identity theft.