You may be wondering if registering on our peer to peer lending platform will lower your credit score. While we do check your credit score when you register on our site, our check has absolutely no effect on your credit score or credit history.
So What Kind of Checks Can Lower Your Credit Score?
It’s actually not the credit check or inquiry itself that can lower your score – it’s the reason for the inquiry. Therefore it’s important to know what types of credit checks are OK and which will lower your score.
If you request a copy your credit score from one of the consumer credit reporting companies, Equifax, Experian or TransUnion, this is called a “soft pull” of your credit file (an easy way to do a soft pull of your credit file is to make a request through AnnualCreditReport.com, and it’s free so long as you make only one request a year).
The reason a “soft pull” does not affect your credit score is because banks, credit card companies and even businesses can check your credit score & history, all without your knowledge or consent. For example, a company can soft pull your credit file when you apply for a job as part of background check. A “soft pull” also happens when you get a pre-qualified credit card offer in the mail. You’re pre-qualified because the credit card company did a “soft pull” of your credit file to see if you would qualify for the offer. In fact, any pre-approval loan process will involve a “soft pull” but it will not affect your credit score.
A “hard pull,” on the other hand, happens when you actually receive a loan or a credit card. It’s still a credit inquiry but now it’s associated with receiving a loan, and, in this particular case, it’s the new debt that really affecting your credit score. However, there are non-loan cases where an institution can requests a “hard pull” of your credit file. This can happen when just applying for a product or service that requires monthly payments, like high speed cable or cell phone service or opening a new savings or checking account. While you haven’t received a loan, these “hard pulls” will still lower your credit score.
Because of the negative hit your credit score can take with a “hard pull,” it’s good to know which activities can trigger a “hard pull,” especially since many cases are not obvious. FatWallet.com comes to the rescue here by maintaining a list of companies that request a “hard pull” of your credit file when you apply and/or receive one of their services.
While it’s reasonable to assume that some types of “hard pulls” affect credit scores more than other types of “hard pulls,” overall, you want to keep the number of “hard pulls” of your credit file to a minimum within any given year. This means thinking twice about a new credit card offers. If your credit score is borderline between “fair” and “poor,” getting that new credit card could push your credit score into dangerous territory were you could be paying higher fees and interest rates on your existing debt.