What Is A Soft Credit Check?

What Is A Soft Credit Check?

One of the first steps a lender takes when reviewing your application is to analyse your credit history. Checking your financial profile and getting a rough idea of how you manage your money when you request a payday loan is something lenders must do to ensure you can afford to repay the money. Following this, once accepted, you will be granted your desired loan to fund any financial emergencies you might be experiencing. However, if a lender doesn’t think you’re the right fit for a loan, your application will be rejected. Here at PM Loans, we also offer bad credit loans to those who have poorer credit reports. Whether your credit score is on the higher or lower side, both hard and soft credit checks may be used to aid a lender’s decision, but what exactly are these?

What’s a Credit Check?

Lenders, banks, and other financial bodies like landlords and mobile phone providers run credit checks to examine your credit report. This way, they are able to gain insight into how you’ve handled your credit over the previous six years. The data provided throughout these checks reveal information regarding your payment history. This along with other information inform businesses of your financial management skills before they make any decisions.

What Is The Difference Between a Hard and Soft Credit Check?

Despite being easily mixed up, soft and hard credit checks are actually very different. Soft credit checks often take place when you search and review your own credit report. Or perhaps also when a lender determines if you qualify for particular interest rates. Even though soft credit checks are recorded, they leave no imprint on your credit report, which means that your credit score won’t be impacted. Unlike hard credit checks, even though they have no negative impact, you will still be able to find out when someone has looked at your credit history. On the other hand, hard credit checks occur when a lender needs to complete a full review of your credit report. These will often occur when applying for a short-term loan, however, this kind of analysis will lead to a decline in your credit score.

What Are The Benefits of Soft Credit Checks?

The main benefit of a soft credit check is that your credit score won’t be impacted. As many know, improving your credit score is a hard, long process that takes more time and effort than expected. So, preserving and building a high score is something that many people do not want to risk ruining. Despite this, part of building your credit score includes understanding what’s going wrong and how you can improve. This can often be done through a soft credit check to analyse and establish your credit profile. You could check your score using websites such as Experian. Following this, individuals can focus on creating the positive change needed to fix their finances.