What does "soft credit inquiry" mean?

A "soft credit inquiry" refers to a review of a consumer's credit report that does not impact their credit score. This type of inquiry can occur when consumers check their own credit reports, or in situations where lenders or service providers conduct a check for pre-approval offers or background checks without the intent of extending credit. Because soft inquiries are not linked to a specific application for credit and do not suggest that the consumer is seeking credit, they do not affect the consumer's overall credit score.

This understanding is crucial for consumers who may want to monitor their own credit health without the fear of negatively influencing their credit profile. Conversely, a "hard inquiry," which typically occurs when a person applies for a loan or credit card, can affect the credit score as it indicates a request for new credit.

The other contexts provided by the incorrect options differentiate between the types and impacts of credit inquiries but do not describe the nature of soft inquiries accurately.