Difference Between a Hard & Soft Background Check

Hard and soft background checks both involve running a credit check. While both are credit checks conducted by employers, landlords or other creditors, some differences exist between the two types of background check. Both hard and soft background checks are run through one or more of the three credit reporting agencies, which are Equifax, TransUnion and Experian.

Use

A hard background check occurs when a full credit report and credit score are pulled. When a hard background check is run, it shows up on the credit report as being a full credit pull rather than an inquiry. A soft background check, however is when a portion of your credit is pulled rather than a complete credit report. The inquiry section on a credit report shows any creditors, lenders or other companies that have looked at your credit, which is a soft background check.

Hard Background Check

The primary difference between a hard and soft background check is the level of detail. A hard background check provides full details on your credit report. In order to run a hard background check, a social security number, full name and an address is required. In order to conduct a hard background check, the company or person running the check typically obtains an application with this information, along with a disclosure that they are pulling credit and a signature of consent from the applicant.

Soft Background Check

A soft background check supplies less detail on the credit history. The most common form of a soft background check is when a creditor is pre-screening possible candidates for a special offer. When you receive pre-approved credit card applications in the mail, this is an example of a soft background check. The credit card issuer looks at a portion of your credit, doing a soft background check, and decides whether you are worth the risk of extending credit. Contrary to a hard background check, a soft background check does not require consent. When an individual pulls a credit report, it shows as a soft background check or inquiry on the credit report, even though the person receives a full copy of the report.

Effects

Another difference between a hard and soft background check is how it affects the credit of the person. A hard background check lowers the credit score, while a soft background check does not. Therefore, a hard background check has a negative effect while a soft background check has little or no effect. Even though a hard background check lowers a credit score, it does not lower a credit score as much as making late payments does. If a lender sees too many inquiries on a credit report, it may cause the lender to deny credit.

Time Frame

Credit laws protect consumers who are shopping for a loan, mortgage or credit. Even if hard background checks are run, as long as the checks are run in a two-week period, each check does not decrease the credit score. The background checks have to be for the same type of loan, but if done in the two-week period, then all of the background checks count as one inquiry rather than multiple ones.