Understanding Hard and Soft Credit Checks: What You Need to Know

Your credit profile in the United States is maintained by three major agencies that record your borrowing and repayment history. Lenders, employers, and credit card companies often request access to this data. It’s important to understand when a hard credit check is necessary versus when a soft inquiry is suitable, and who initiates these checks.

Hard credit checks are typically required in the following cases

Applying for auto loans

Securing a mortgage

Requesting educational loans

Applying for new credit cards

Loan applications for property purchase

Instances where hard inquiries may be authorized include

Verification by stock trading platforms

Setups for phone or internet services

Opening checking, savings, or money market accounts

Increasing existing credit limits

Soft credit checks are commonly used when

Reviewing your personal credit score

Pre-approved loan or credit card offers based on past activity

Employers performing background checks for job suitability

While not always required, soft inquiries can also occur in other situations:

When a landlord checks your credit before renting a property

When telecommunications providers evaluate your credit for service setup

During account opening processes at banks

It's important to note that hard inquiries require your explicit consent after a loan or credit application, whereas soft checks can happen without your permission. Hard inquiries adversely affect your credit score, while soft checks typically do not harm your credit standing.

Most soft credit checks, including those for personal score assessments, have minimal to no impact on your credit health.