If you’re trying to build your credit, you might be interested in learning about the difference between soft credit inquiries and hard inquiries. Sometimes these are referred to as soft pulls and hard pulls. When you are either building your credit or rebuilding it, one of the more effective ways to do that is through getting a few credit cards and then using them wisely. That said, you probably want to choose credit cards that are known for doing soft pulls because it won’t affect your current credit score nearly as much.
What Is a Soft Pull on Your Credit?
A soft pull on your credit means that you have authorized someone to look at your credit rating as well as your credit history, but it doesn’t have the impact on your credit score that a hard inquiry would have. In fact, it doesn’t affect your credit score at all in most cases. The only time that you might run into an issue where it could take points off of your credit score is if you have numerous soft pulls in a very short amount of time. Generally speaking, you don’t want to have more than two or perhaps three (at the most) inquiries within a 90-day time span, regardless of the nature of the inquiry itself. If you do get into a situation where you have more than that and they’re all soft pulls, you might see your credit score go down by approximately five points. Typically, that’s not enough to affect most people but if you’re in the rebuilding stages, you probably want to hold on to every point that you possibly can.
Do Credit Card Companies Do Soft Pulls?
Fortunately, there are some credit card companies out there that do soft pulls. This can happen in one of two ways. You can seek out the credit card companies that are known for doing these types of inquiries yourself or you can wait for the offers to come to you. In order to better understand these two options, it’s important to take them one at a time. When seeking out a credit card company that does a soft pull, your first step is to know which ones perform these types of inquiries in the first place. You should know up front that there aren’t a lot of credit card companies that perform soft pulls when you are seeking them out for an application. That said, you do have a few options at your fingertips. These include Applied Bank, First Progress, Self and Open Sky. If you’re more interested in letting the credit card offers come to you, you probably won’t have to wait very long. Even when you’re just building or even rebuilding your credit, there are companies out there that can’t wait to get you to open an account with them.
Let the Credit Card Companies Find You
For most people, the credit card offers start coming in the mail the moment they turn 18 years of age. If you have found yourself in hot water with your credit in the past and you’re currently rebuilding it, the same thing still holds true. A lot of these companies do what is known as a soft pull pre-approval process. It amounts to them sending you an offer saying that you are pre-approved for a certain credit limit, provided that you reply by a specific date. Typically, these companies have done a soft pull on your credit, but it won’t show up on your credit history or lower your score because it isn’t something that you have personally authorized. However, if you decide to accept one of their offers, you will then have what is known as a hard inquiry on your credit report because they won’t extend credit to you until they double check your credit score, even when you’ve already been pre-approved. It sounds like a trap, but it can actually be a good thing if you take the time to carefully evaluate what that particular card has to offer and compare it with the interest rate and any additional fees or penalties that will likely apply.
Taking the Plunge
It can be scary to apply for a new credit card, even when you’re working on a pre-approved basis. There’s always that moment of trepidation when you don’t know whether or not you will be approved and then even if you are, you have to realize that the credit card you are about to be issued does not represent free money. Instead, you’re being extended credit on the basis that you will pay back every penny that you spend and then some. A lot of credit cards, especially the ones that work with people who are rebuilding their credit, have a tendency to charge annual fees the moment that you are granted the card. That means that you don’t even have the card in your hands, yet you’ve already been charged a fee. It sounds scary, right? The thing is, this type of card can actually save you some money because it’s a great way to rebuild your credit. The idea is not to get in over your head. You’ll likely have dozens of offers coming your way, so except two or three of them and let the rest go. The last thing you want is a wallet full of maxed out credit cards that you can’t pay for. Now that you have a better understanding of soft pull credit cards, you can start to tailor that understanding around your personal needs when it comes to getting the cards that work best for you. Regardless of the particular type of situation that you are in regarding your credit, you can find something that will likely work on your behalf. This is especially true if you’re willing to take your time and do plenty of research on each of those cards before actually taking an offer. Doing so helps to ensure that you’re accepting the right offer as opposed to taking anything that comes along.