Difference Between a Hard Credit Check & a Soft Credit Check

Lenders pull a detailed credit report from an organization referred to as a “Credit Bureau” every time you apply for a loan. Data from this report is used in order to decide whether to approve you for the loan. In addition, data from this report is used to determine the proper terms to apply based on one’s risk factors.

Credit reports contain a detailed history on how you’ve paid back loans, how many loans you’ve applied for, and whether you’ve ever been reported to collections. The riskier the finding on your report, the more likely it is that you are either declined or see higher interest rates.

What is a “hard credit check?”

Every time a lender analyzes your credit report from a traditional Credit Bureau to evaluate a loan application, a “hard credit inquiry” is generated because the Credit Bureau makes a note that you applied for a loan. After this note is stored in your credit report, other lenders in the future will see that you’ve applied for that loan in the past. An important point to note is that these credit checks count as hard inquiries on your credit report, regardless of whether you’re approved. As a result, your credit score might go down by five to ten points just for applying. This is normal, and is part of the credit application process, and should be nothing to worry about.

A hard credit check loan uses something called a “soft inquiry” that doesn’t count against your credit score. This isn’t a full credit check but instead verifies your basic information and is used to see what products you might qualify for.

Another way that loans might involve a “soft credit check” is if they use data from something called an “alternate credit bureau”. Alternate credit bureaus are regional credit bureaus that focus on a specific portion of the lending market. Alternate credit bureaus can give more relevant information for people with bad credit histories than a traditional bureau. Usually, this results in potentially higher approval odds. Furthermore, because data from these alternate bureaus usually don’t get factored into traditional credit scores, there is typically no “hard check” that could impact your credit score.

Advantages of a “Soft Credit Check” Loan?

“Soft Credit Check” loans can be a good option for you when you don’t want your application submission to decrease your credit score or if you have a credit history that’s below average. In such cases, it is possible to be approved for a loan – even if you have bad credit.

They can also serve a great benefit due to their speed and convenience. If you need a car repair instantly, you may not have sufficient time to wait for a bank or credit union to make a decision in 7 to 10 days.

Can’t hard credit check loans be predatory?

Unfortunately, on some occasions, this can be true. Many soft credit check loans on the market are predatory and are designed to trap one in a cycle of debt. However, there are non-predatory options available as well, such as the ones offered by Federal Advance. Our main intention, is to help those in need while helping to build credit over time.

What’s the difference between an Instant approval loans versus an Instant decision loan?

Unfortunately, many lenders do engage in predatory tactics. While some might maliciously advertise “instant approval” loans, it’s very unlikely that they actually approve everybody who applies – this is typically an unethical way to get people to apply with them and not other lenders.

At Federal Advance, we ethically advertise “instant decision loans,” a factual claim meaning that once you submit your application, you’ll find out whether you’re approved on the same day. Please note that “instant decision” does not mean “instant approval”. As previously mentioned, no lender can seriously guarantee instant approval on all loans. So when lenders say instant approval, they are being misleading and likely really mean instant decision. There’s a good chance one can be approved even with poor credit, but the only guarantee is that we can make is that the decision will be instant.

“Soft credit check” loans from Federal Advance:

Federal Advance provides a convenient way to receive a instant decision loan, “no hard credit check” loan. You can apply online 24/7 from your phone, tablet, or computer. If approved, you can receive your money in as little as one business day.

As a trusted resource for high-quality online loans, Federal Advance knows the importance of customer security and confidentiality. When you request a loan through Federal Advance, you can feel safe knowing that we protect your information through every part of the process. Get approved up to $35K by visiting Federal Money Loans or Federal Credit Loans.


News Reporter