In the ever-increasing lexicon of language and marketing verbiage that consumers are expected to familiarize themselves with or face penalties, is the concept of “pulling a credit report”.
When you (consumer) apply for a credit card or a lease the potential creditor pulls your credit report to evaluate the risk of getting into financial bed with you. There are two ways a credit report is pulled: 1) a “soft inquiry” or 2) a “hard inquiry”. The distinction between the two is important.
Creditors, potential creditors, potential employers, mortgage servicers and landlords do soft pulls on you all of the time, often without your knowledge or consent. This is permitted by the Fair Credit Reporting Act (“FCRA”) because a soft inquiry does not have a negative effect on your credit score. As the United States District Court for the District of Nevada recently noted, a “soft pull does not provide individual account information found on a full consumer report for a “hard pull” for the extension of credit.” See Vanaman v. Nationstar Mortgage, LLC, Case No. 2:15-CV-00906-KDJ (March 22, 2017).
Alternatively, a “hard pull” DOES affect your credit score and may cost you up to five (5) points a pop off of your FICO score. Hard pulls are triggered when you apply for credit, such as a credit card, auto loan, a mortgage, a student loan or a personal or business loan.
If you find yourself wondering whether an employer or landlord plans to pull your credit you have the right to ask them which “pull” they intend to use. You also have the right to call one of the credit bureaus to get it straight from the source.