Soft inquiries vs. hard inquiries
A soft inquiry happens when you check your own credit or when a company reviews it without you applying for new credit. Soft inquiries don't affect your score, and other lenders generally don't see them.
A hard inquiry happens when you formally apply and authorize a lender to pull your report to make a decision. It can lower your score a little for a while and stays on your report for a period. One or two rarely matter much; many in a short span can make lenders cautious.
How pre-qualification usually works
Pre-qualification gives you a sense of which products are realistic before you commit to a full application. Depending on the company, it may use only the information you enter, or a soft pull. Ask which one before you start.
A full application is where hard inquiries usually happen, once you've chosen a direction and a lender needs to decide.
What Capco Capital's pre-qualification does
The pre-qualification form takes about two minutes and uses the answers you provide, with no credit pull and no obligation. Nothing is pulled without your permission.
Later, only after you speak with one of our advisors and give your explicit authorization, a full application may involve a credit report from one or more of the three major bureaus. A lender's full review later in the process may also include a credit check.
How to shop without worry
Start with options that don't pull your credit. Narrow down which products fit before you authorize any hard pull. Avoid applying everywhere at once, since a cluster of inquiries can make lenders ask questions. And check your own reports, which is always a soft inquiry, so you know what a lender will see.
Business credit inquiries
Business credit files, kept by commercial reporting agencies, are separate from your personal report. Lenders and vendors check them to see how your company pays its bills. A check of your business file doesn't change your personal score. Because most small-business lenders also look at the owner's personal credit, a full application usually involves both. Ask which reports will be reviewed before you authorize anything.
Soft vs. hard credit inquiries
| Soft inquiry | Hard inquiry | |
|---|---|---|
| When it happens | Checking your own credit, some prequalifications | A formal credit application |
| Affects your score | No | Can, slightly and temporarily |
| Visible to other lenders | Generally no | Yes |
| Needs your authorization | Not always | Yes |
Common questions
Does pre-qualifying for a business loan affect my credit?
Not if it uses a soft inquiry or no credit pull. Ask the company which it uses. A formal application with a hard inquiry is a separate, later step.
Does a business credit check affect my personal score?
A check of your business credit file alone doesn't touch your personal score. Most small-business lenders also review the owner's personal credit, which is where an inquiry can show up.
How long does a hard inquiry stay on my report?
It stays visible on your report for a while, and its effect on your score usually fades sooner. The exact treatment depends on the credit bureau and scoring model.
Can I check my own credit for free?
Yes. Checking your own credit reports is a soft inquiry and never affects your score. Federal law gives you access to free reports from each of the three major bureaus through the official annual credit report site.
Related
We're commercial lending advisors based in Lafayette, Louisiana. We look at your business the way a lender will, using what you share plus a free Capital Position Report built from public records, then match you to the best-fit programs across our lender network. We arrange financing for businesses nationwide, except in California.
Pre-qualifying takes about two minutes, has no credit impact and no obligation. Lenders pay our fee when a loan funds; here's exactly how we get paid.
General education, not legal or tax advice. Requirements, terms and timing vary by lender and program. Capco Capital is a commercial lending advisory firm operated by Capco Capital LLC. We arrange financing through third-party lenders as a loan broker and are compensated by the lender when a loan funds. We are not a lender and are not affiliated with the U.S. Small Business Administration.
