Soft vs. Hard Credit Checks: How They Impact Your Financial Health

When applying for credit, lenders conduct credit checks to assess your financial history. These checks fall into two categories: soft and hard. Understanding the difference can help you protect your credit score.

A soft credit check is a background inquiry that does not impact your credit score. It is often used for:

• Eligibility checks for loans or credit cards.
• Employer or landlord background checks.
• Personal credit score inquiries.

A hard credit check occurs when you formally apply for credit. It may temporarily reduce your credit score and remains on your credit report for up to two years.

Examples of hard credit checks include:

• Mortgage or loan applications.
• Credit card approvals.
• Car financing applications.

• Space Out Applications: Avoid multiple hard credit checks in a short period to prevent a negative impact on your score.
• Use Pre-Approval Tools: Some lenders, including Snap Finance, offer pre-qualification with only a soft credit check.
• Monitor Your Credit Report: Regularly reviewing your credit report helps you understand how inquiries affect your score.

Knowing the difference between soft and hard credit checks helps you make informed financial decisions. By using pre-approval tools and managing applications wisely, you can protect your credit score while exploring financing options.