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What Happens When Someone Checks Your Credit?

Written by
Alex Huntsberger
Alex Huntsberger is a personal finance writer who covered online lending, credit scores, and employment for OppU. His work has been cited by, Business Insider, and The Motley Fool.
Read time: 4 min
Updated on December 20, 2023
young woman with upturned hands asking what happens when someone checks your credit?
What happens during a credit check depends on what kind of check is being run—and who's doing the checking.

There are a lot of myths surrounding credit scores, especially the impact of checking them. That’s why we’ve created this little blog post for clarification.

The internet is pretty good at sustaining all sorts of “out there” legends—but we figured it's worth a try. In that regard, it's a lot like checking your credit score!

There are two types of credit checks: hard and soft.

When you apply for a personal loan, mortgage, auto loan, or student loan, your lender is going to want to review your credit report. To do this, they may need to conduct what’s called a “hard” inquiry on your credit report. This provides them with a detailed copy of your credit report, requiring your consent.

Alternatively, a business might want to access your credit report for a more general purpose, like renting an apartment or “pre-approving” a credit card offer. In cases like these, a business will run what’s called a “soft” inquiry. Unlike hard inquiries, these soft credit checks can be performed without your permission—or even your knowledge.

One of the biggest differences between hard and soft credit checks is how they affect your credit score. Hard inquiries are recorded on your credit report under the “recent credit inquiries” category, and they do affect your score. Depending on your credit, a single hard inquiry can ding your score by five points, and multiple inquiries in a short amount of time can have a larger effect.

Meanwhile, soft credit checks are also recorded on your report, but they are only visible to you and have zero effect on your credit score.

Soft credit checks are also recorded when you check your credit score or request a copy of your credit report as per the law. All three credit bureaus must provide you with one free copy of your report annually upon request. To order a free copy of your report, just visit

Why do hard inquiries affect your credit score?

To explain why hard credit inquiries affect your credit score, it helps to think like a lender:

You receive an application for an unsecured personal loan, and you pull up a copy of the applicant’s credit report. You notice that, recently, they’ve applyied for multiple personal loans and credit cards. What does signify?

For many lenders, a surge in recent credit inquiries points to one thing: A borrower who requires more credit, which means they have probably encountered additional expenses they need to cover. When a person is struggling with added costs, including extra debt, it means they are somewhat less likely to repay a new loan.

However, there is one obvious exception to this rule: shopping around! To find the best loan possible, it helps to apply for a bunch of different ones. Once your loan application is approved you’ll see the terms these lenders are offering you.

Shopping around for the best loan is smart financial behavior and something to be encouraged particularly when it comes to mortgages, auto loans, and student loans. Inquiries made within the same 45 day period are bundled together on your credit report and are counted as a single hard inquiry.

The benefits of soft credit check loans.

For people with bad credit, a hard inquiry on an in-person or online loan application might as well be a “No Trespassing” sign. That’s why many of them prefer no credit check loans that don’t perform any hard inquiries—and come with much higher interest rates to compensate.

While some of these loans can provide a sensible short-term financial solution, there is a big difference between checking a person’s credit score and checking their ability to repay, period. That’s why lenders offering loans to people with bad credit perform a soft credit check; one that will not affect an applicant's credit score but gives them a better outlook of an applicant's financial health.

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