What information is needed for a soft credit check

By Sarah R
Modified on February 9, 2024
what information is needed for a soft credit check

What information is needed for a soft credit check? If you want to see the information lenders look at when they determine your approval for loans or lines of credit, soft credit checks are something you want to be familiar with. 

Learn all about credit checks and how lenders use them to determine loan approval, funding amounts, interest rates, and more!

What Do Lenders Need To Perform a Credit Check? 

With just a few basic pieces of information, lenders can request to see your most current credit profile. The purpose of a credit check is to help lenders get an idea of your financial habits and behaviors, which they then use to decide if you would be an appropriate borrower for their lending product. 

Sometimes, all lenders need is your name in order to access your credit reports. However, they typically request a series of information to ensure they are accessing the correct credit report. 

When applying for loans or lines of credit, the lender may request the following information in order to perform a credit check:

  • Full legal name — the most basic piece of information lenders require is your full legal name. This entails your first, last, and a middle name if you have one. 
  • Government-issued photo ID — to confirm your name/identity, lenders require a photo ID distributed by the government. Common forms of identification they may accept are a driver’s license or passport. 
  • Social Security Number — the most efficient way to confirm someone’s identity is to get their Social Security Number. If you don’t have a Social Security Number, most lenders will accept an Individual Taxpayer Identification Number as well. 
  • Proof of residency — lenders will want to confirm where you live. You can prove your residency using a utility bill or piece of mail with your name and address on it. 

Once lenders have your basic info, they can perform their credit checks. 

What Is a Soft Credit Check vs. Hard Credit Check?

There are two different ways borrowers and lenders can look at credit reports; via hard and soft credit checks. A soft credit inquiry, also called a soft credit pull or Soft credit check, is an unofficial credit report. Consumers can perform soft inquiries/soft pulls via most online bank or credit card accounts. Comparatively, a hard credit inquiry, also called a hard credit pull or hard credit check, is an official credit report distributed by one of the major credit bureaus.  

Typically, consumers will request a soft inquiry to check their own credit report, and financial institutions will perform hard credit inquiries in response to credit or loan applications. However, some lenders may perform a soft pull at the very beginning of the loan application process to see if potential borrowers are pre-qualified. 

How Can I Access My Credit Report for a Credit Check?

According to the Fair Credit Reporting Act of 1970, consumers are entitled to one free copy of their official credit report from each of the major credit bureaus at least once a year. You can request an official copy of your credit report by contacting a credit bureau via phone or email. 

You can also access your unofficial credit report via your bank or credit card issuer. Simply sign into your account and search for a link to check your FICO score. Here, you will find your most recent credit score, as well as information that clarifies how your score was determined. 

Your unofficial credit report has essentially the same information contained in the official reports financial institutions receive when they perform hard credit inquiries, so it may be most convenient to check your credit scores this way. 

Do Soft Credit Checks Affect My Credit Reports?

No! A soft credit inquiry will not affect your credit report. You can do as many soft credit checks as you like without any fear of it damaging your credit score. In fact, many financial advisors encourage consumers to check their credit reports as often as possible. By staying familiar with your credit report, you can see how your financial habits and behaviors affect your score in real-time. Checking your score often can also help you identify and correct any errors on your credit report as well as help prevent identity theft or fraud. 

On the other hand, multiple hard inquiries will undoubtedly affect your credit reports and credit score. Each time there’s a hard pull on your credit, you may see your credit score drop up to five points! 

What Information Goes Into a Credit Check?

There are five main categories that make up a credit report. They are: 

  • Payment history — how on time you are with making payments on your bills and due expenses. This is the most influential factor on your credit report and helps determine credit scores by 35%. 
  • Total amount of debt owed — after payment history, the amount of debt you owe is the next most influential factor on your credit report. The total amount of debt you owe makes up 30% of your credit score. 
  • Credit history length — the next most influential factor contributing to credit scores is the length of credit history. The longer a consumer has had open and active financial accounts, the more their credit score will benefit. Length of credit history makes up approximately 15% of your credit score. 
  • Number of hard credit checks — how often you apply for loans or lines of credit contributes to 10% of your overall credit score. 
  • Types of credit — lastly, the types of credit accounts you have makes up the final 10% of your credit score. Typically, lenders like to see consumers having good debts like student loans or mortgages rather than bad debts like payday loans online same day or car title loans. 

What Is a Credit Bureau?

A credit bureau is a financial institution that collects data on consumers regarding their financial habits and behaviors. Lenders then use this information to decide the creditworthiness of a borrower. There are three major credit bureaus, they are: 

  • Experian. 
  • Equifax. 
  • TransUnion.   

Can I Get a Loan or Credit Card Without a Credit Check?

Most credit card companies will always perform a credit check before they approve any application. It is much more common to receive a loan without having to go through a credit check. However, keep in mind that if a lender does not perform a credit check, they may not be the most reputable option. Lenders perform credit checks to make sure they are pairing borrowers with the most appropriate financial product. If a lender has no idea what your credit report looks like, they may inadvertently approve you for a loan that is completely wrong for your personal financial situation, leaving you vulnerable to missed/late payments or even loan default. 

Tips for Improving Your Credit Report 

Improving your credit reports and credit scores can only benefit you financially. When you boost your score, you may find that: 

  • Your approval odds on credit applications have increased. 
  • You are approved for a higher spending limit regarding loans and lines of credit. 

While you can’t transform your credit report overnight, there are things you can do now to start seeing significant improvement in a few months or weeks! 

Sign Up for Autopay

Since payment history is the most important part of a credit check, it’s important to be adamant about paying your bills and financial obligations on time. To take the stress out of this task, you can sign up for autopay. With autopay, money is withdrawn directly from your bank account to go towards a bill or payment on the designated due date. As long as you have sufficient funds in your checking account, you’ll never have to worry about missing a payment if you have autopay.

Avoid Inquiries for New Credit 

When working on building credit, only apply for a new loan or line of credit when it is absolutely necessary. As discussed, each time you apply for a loan or credit card, the lender performs a hard credit check. While one hard credit inquiry won’t cause your score to plummet, multiple hard inquiries within a short period of time may cause your score to drop quite a bit. 

If you do need to apply for loans or credit cards when trying to build credit, do your research and apply for products that are appropriate for your personal financial situation. For example, if you have a particularly low score, you may not want to apply for a traditional loan with a retail bank. Instead, try a credit friendly option like a credit building installment loan

Focus On Paying off Debts

Knock down your debt-to-income ratio by focusing on paying off debts. Two of the most popular debt repayment methods are the debt avalanche and the debt snowball methods. To use the debt avalanche method, start by paying off your largest debts first. The goal is to use the momentum of paying off those large debts as motivation to keep going and pay off the smaller debts until everything is cleared up. 

To use the debt snowball method, start by paying off your smallest debts. With this debt repayment method, the goal is to work your way up to bigger debts by focusing on knocking out smaller debts first. 

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