"Soft" Credit Checks Versus "Hard" Credit Checks: How Credit Reports For Auto Dealers Work

23 October 2015
 Categories: , Blog


When you walk into a dealership for a new or used vehicle, but you are not sure you want to buy, you may still find yourself filling out some information with a sales representative. Since you want to protect your personal information, you may be surprised when the sales rep asks you for your social security number. He or she will use this number to run some credit reports for auto dealers, which may be the "soft" credit check kind, or the "hard" credit check kind. Before you sign off on allowing the sales rep to run the report, here is what you need to know about these two kinds of credit checks and how the checks and reports work for auto dealers.

"Soft" Credit Checks

"Soft" credit checks are not full-on credit reports. Instead, this type of credit check is performed by the dealership to ascertain if you have a credit history and are currently employed. It may even tell them if you are carrying a debt load and what that debt load looks like, but it does not list in graphic detail your full credit history. It is also referred to as a "soft" credit check because it does not show up on your annual credit reports as a search performed by the dealership, which is quite favorable to you because then it does not look as though you are attempting to accumulate more credit and overextend yourself.

"Hard" Credit Checks

These are the types of credit checks that yield a complete credit history and credit report from all three of the national credit reporting bureaus (and, occasionally, companies like NCC Direct, Inc.). Most dealerships will not immediately launch into a "hard" credit check unless they are certain you are a definite sale on an automobile and you have given them your full permission to perform the hard credit check. These checks and reports do show up on your credit histories, and repeated hard checks can reflect badly on your credit history and cause some damage to your credit score, so be very careful about to whom and when you give permission for a hard credit check.

Word of Advice Regarding Your Credit Reports and Credit Checks

If you want to bypass the repeated checks and paperwork for every dealership you visit where there might be a car or truck that you want, get your free credit reports ahead of time. You can request one free report annually from each of the three national credit reporting bureaus. If you do it online, then you can download and print them and not have to wait for snail mail to bring them. That way, you can take all three current reports into every dealership and present your reports for the sales reps to look over and you do not have to submit to repeat credit checks of the soft or hard kind.