One of the most important considerations when it comes to securing a home loan is your credit score. It’s often the first thing a lender looks at, and if you have a FICO credit score that is under 500 you may not be able to get a home at all without a bad credit loan program of some kind.
That’s why it’s so important if you’re considering any kind of loan to keep an eye on your credit score, and the best way to do that is to seek the help of a soft pull company.
What Is A Soft Pull Company?
Before we can explain the idea of a soft pull company, you need to understand the difference between a soft pull and a hard pull when it comes to credit.
A “hard pull”, also known as a hard inquiry, is an official credit score check that has to be approved by the loan applicant.
Hard pulls give the lender a complete understanding of your entire credit history, but they come with a significant downside, which is that they actually damage your credit score by a few points.
Worse, they stay on your credit report for 24 full months after the inquiry is made.
This makes a certain amount of sense if you think about it – if you’re making a hard inquiry, you’re probably about to take on more debt in the form of a major loan, so you’re utilizing more credit and your score should go down.
But it’s also very frustrating, and as consumers we want to do anything we can to make as few hard credit inquiries as possible.
This is why we prefer “soft pulls”, also known as soft inquiries, which do not appear on your credit report and do not affect your credit in any way, but give a potential lender much of the same information.
A soft pull company is a company that allows you to check your credit with a soft inquiry instead of a hard one. You may have seen commercials for companies like Experian, Credit Karma, or FreeCreditScore.com.
These companies and others like them provide a very useful service by allowing you to check your credit score without the harm caused by a hard pull.
Soft pull companies may also be used by the lenders themselves to check your credit with a soft pull and “pre-approve” you for whatever it is you’re applying for. This method of business is especially popular with utility companies like the kind that provide energy or water.
Why Do I Need To Check My Credit?
Most of us don’t think about our credit score unless we’re getting ready to apply for a credit card, a loan, or another major new credit utilization. Sometimes we don’t think of our credit score as being that important, or we’re afraid of what we’re going to find.
But checking your credit report regularly is an extremely important part of being a financially responsible person.
Firstly, checking your score regularly allows you to respond to changes quickly. If your credit score suddenly falls, you might not be aware of it if you’re only checking once a year or less.
If you’re checking more often using a soft pull company, you can try to repair the damage as soon as it appears on your report.
That way you can make sure your credit score is nice and high by the time you’re actually applying for an important loan.
And how do you repair your credit? This is another question a regular check with a soft pull credit company can answer.
As you monitor your credit score, you’ll have a stronger understanding of what actions are helping you and what actions are hurting you, and you can make sure to do as much of the former as possible!
A check with a soft pull credit company can also help you keep an eye out for inaccuracies. Sometimes credit bureaus report things incorrectly (after all, they’re only human) and if you notice that your score is lower than it should be you can dispute the error and get it fixed.
This is another issue you don’t want to hear about for the first time after an application gets rejected!
And these are only a few reasons you might consider using a soft pull credit company to keep an eye on your credit report.
Store Credit Cards
Applying for a credit card almost always requires a hard inquiry. However, credit cards that are limited to use at a specific store or group of stores can often be obtained with only a soft pull credit inquiry.
Comenity Bank is a company that is linked to a lot of store credit cards, all of which are soft pull companies. Stores that work with Comenity include Pottery Barn, Victoria’s Secret, Forever21, Motorola, and many others.
Store credit cards are a great way to build your credit. All you have to do is make small, regular payments on the card and it will show that you are capable of staying on top of a line of credit, which can have a great effect on your report.
So while they may not be as useful as a hard pull credit card like Visa or Discovery, store credit cards are still something that anyone who’s looking for a good credit solution should consider.
Auto dealers frequently use soft pull companies to check a customer’s credit with no impact to their credit report. They might post links to their soft pull page on their dealer website, in a social media post, or in a marketing E-mail.
Some dealerships will also offer a free soft pull credit report to anyone who comes through their door because it entices you to stay around and buy a car.
Soft pulls are very convenient for auto dealerships and similar businesses because you will frequently end up shopping around for different cars.
With a hard pull credit inquiry your credit score will go down every time you apply for financing at a different location, and the damage can stack up fast.
If an auto dealership goes through a soft pull company, it’s better for them and for you as a consumer.
Hopefully you’ve now learned a little about soft pull companies, what they do, and why they may be important to you and your future credit dealings. There’s lots of great options out there, so go out and find the company that’s right for you and your credit history!