Soft pull credit cards are credit cards that don’t require a hard credit check to open an account. With a soft pull credit card, a soft credit check—also known as a soft pull or inquiry—is all that is required to open an account.
What is a soft pull, and what are soft pull credit cards?
There are two types of pulls or inquiries that can be performed on your credit check. A soft pull is an overview of your credit history to get a surface-level glimpse at your accounts, and it has no impact on your credit score. Soft pulls are typically performed by a potential employer or credit card issuer, or when you check your credit score and review your own report.
On the other hand, a hard inquiry is a deep dive into your credit history and management of your accounts. For most lines of credit, a hard pull is required for a lender to approve the account and officially make an offer. The biggest difference between a soft and hard pull is that a hard pull almost always impacts your credit score (although it’s usually only by a few points and is temporary).
Most scores bounce back from a hard pull within a year. Hard pulls are usually performed when applying to a new credit card account, applying for an apartment and opening accounts with some utility companies.
Soft pull credit cards vs. preapproved credit cards
While secured cards are almost always not the most ideal credit card option, if you have bad credit or no credit history at all, a secured credit card that only requires a soft credit check to open an account could be a helpful option. With a secured credit card, you will have to make a security deposit as collateral, and your approved credit line will more often than not match the deposit you put down.
Preapproved credit cards have a preapproval process a potential borrower can go through before officially applying for a credit card. During the preapproval process, the issuer will run a soft inquiry on a person as a preliminary measure to gauge their chances of officially being approved to open an account later down the line.
Preapproval does not guarantee that the issuer will go forward with your credit card application, but it’s a good indication of your chances. Once preapproved, if the person decides to go forward and submit a formal application, a hard inquiry is performed by the credit card issuer to get a more in-depth look at the potential account holder’s credit history.
Which issuers offer soft pull credit cards?
When it comes to issuers that offer soft pull cards, it greatly depends on what you define as a soft pull credit card. If you simply want to know which credit cards run a soft-pull to determine if preapproval is granted, consider checking out Bankrate’s CardMatch tool to see all the preapproved credit cards you may qualify for. In general, many credit cards do preapprovals, so at the very least you’ll know what some of your options are.
On the other hand, if you’re interested in a credit card that only requires a soft inquiry to open an account, the number of cards available is pretty limited. Some well-known issuers, like Capital One, have soft pull credit card options. As a whole, it just requires a teeny bit more digging. Here’s a list of a few solid soft pull credit card options:
Best soft pull credit cards for 2020
OpenSky® Secured Visa® Credit Card: Best for educational support on credit journey
- Regular APR: 17.39 percent (variable)
- Purchase intro APR: N/A
- Annual Fee: $35
- No hard credit check
- Your credit limit will be equal to the security deposit provided on the account.
- There’s an active online Open Sky Secured Card community on Facebook, and there’s also access to an OpenSky app with more resources on your smartphone.
Secured Mastercard® from Capital One: Best for consumers repairing bad credit
- Regular APR: 26.99 percent (variable)
- Annual fee: $0
- No hard inquiry
- Your credit limit will be equal to the security deposit you place on the card.
- After consistent monthly payments, this card reports to all 3 credit agencies.
- Down the line, it’s possible to qualify for an upgrade from a secured credit card to an unsecured credit card.
Self – Credit Builder Account + Secured Visa® Credit Card: Best for building credit with savings
- Regular APR: 21.74 percent (variable)
- Annual Fee: One Time $9 + Secured Card $25
- If you make three consecutive monthly payments on time and have at least $100 in savings, you’ll automatically be qualified for a Self Visa Credit Card without a hard inquiry.
- The borrower starts with a credit builder account that reports to all three agencies.
- Every time you make an on-time payment it’s reported to the agencies and the borrower builds a credit history and savings.
- Your savings from paying off your credit builder account serves as your refundable security deposit on your credit card.
Are soft pull credit cards worth it?
Soft pull credit cards are definitely a useful tool for someone with poor credit or someone who’s looking to improve their credit scores and build general creditworthiness. However, soft pull credit cards can be limiting, so reading the fine print on the individual credit card of interest is paramount.
Although soft pull credit cards are a solid way to fix or build credit, it’s very important to explore all the avenues available.
With all the soft pull credit cards available, not all of them are created equally. Make sure that the secured card you’re interested in has a clear pathway to graduating to an unsecured card in the future.
Other options to build credit, especially for those without a credit history do exist. A lot of banks have first-time credit card account holder programs with unsecured card options. These cards could potentially be a better fit than a secured card because regular credit cards have more perks, like reward programs.
If you decide that you may need help or assistance, you can look into getting a co-signer for your secured card. This person would be liable for any debts in case the account holder becomes unable to pay for some reason. If you’re someone with no credit but aren’t ready to get a card on your own, becoming an authorized user on a parent or guardian’s card could be an option to look into.
The bottom line
Soft pull credit cards can be a helpful option for someone with bad credit or no credit history as they create a clear pathway to improving your credit score with punctual monthly payments.
Preapproved credit cards utilize soft inquiries as a preliminary measure to gauge the likelihood of a credit card being approved down the line. There are a lot more preapproved credit card options than soft pull credit cards available; however, a preapproved credit card will require a hard inquiry down the line to officially open up an account.
No matter what route you end up deciding on, it’s important to understand these key differences to determine the right avenue for you.
3 credit habits that you need to break
Are you using your credit card responsibly? Or do you have a few bad habits? Take a look at three common bad habits that people have with their credit cards and the best ways to stop doing them.
Habit 1: Pushing the limits
The first bad credit habit is pushing your outstanding balance close to its limit. What’s wrong with that? The first problem is that you’re giving yourself a larger debt load to contend with every month — one that accumulates interest the longer that it sits. It could be very difficult to pay down, and it could even lead to you maxing out your card.
The second problem with this habit is that it leaves you vulnerable to emergencies. You’ve taken up the majority of your available credit, so you can’t depend on it for unexpected payments. What if you need to pay for an urgent repair and there’s not enough room on your card? What can you do?
To avoid that difficult situation, you could apply for an online loan to help you cover the emergency costs and move forward. See how you can apply for an online loan in Ohio when you have no other safety nets to fall back on. It’s important that you only turn to this solution when you’re dealing with an emergency. It’s not for everyday purchases or small budgeting mistakes.
In the meantime, you should try your best to keep your credit utilization at 30% or lower — this means that your balance should be below the halfway point of your limit.
Habit 2: Paying the minimum
You pay your credit card bills on time, but you only give the minimum payment. While this habit can stop you from racking up late fees and penalties, it can still get you into hot water if you’re not careful.
Only paying the minimum for your bill will make it very difficult for you to whittle down the balance, especially when you’re continuing to charge expenses on your card. You’re only taking $20-$25 off a growing pile.
So, what can you do? If you’re paying this amount by choice, stop it — you’re only making things harder for yourself down the line. If you’re paying this amount because you don’t have any more funds, look at your budget to see whether you can cut your monthly costs to get more savings and use them to tackle your balance.
Habit 3: Using it for every single expense
You don’t need to put every single expense on your credit card. Your morning coffee? Your afternoon snack? Putting these small, everyday expenses on your card is a habit that can make your balance climb quickly.
You also don’t want to put some very important expenses on there, like mortgage payments. For one, these payments are large and will take up a significant amount of your credit. Secondly, if you need to use a credit card to make these payments on time, you need to reinvestigate your budget to see whether you can actually afford your living space.
So, what you should you do? Use a debit card, cash or checks to pay for the items above. Only put expenses on your credit card that you’re positive you can pay off in a reasonable timeframe.
Don’t let these bad habits drag you down and get you into financial trouble. Break them now, before it’s too late.
Free credit reports have been extended; here’s why it’s important to check yours regularly
Typically, you’d be able to check your credit report — at least for free — just once annually through each of the three major credit reporting agencies. But thanks to the coronavirus pandemic, credit reports are now more accessible than ever.
Credit reporting companies Equifax, Experian and TransUnion are all offering free credit reports weekly through April 20, 2022.
The move means better insight into your financial health during what, for most, is an economically challenging time. According to experts, it might also be a time that’s ripe for at-risk personal information and identity theft, too — even more reason consumers should be checking their credit on the regular.
Have you checked your annual credit lately? If not, here’s what you need to know about these free nationwide credit reports and how to get them. If you’re not sure where you fit on the credit score spectrum, you may want to start using a credit monitoring service to track changes to your credit score. Credible can get you set up with a free service today.
Free credit reports for all?
The nation’s three credit bureaus initially started offering free weekly credit reporting last year, just after the pandemic began. In early March, they announced they’d extended the offer for another year, this time through April 20, 2022.
To request your free credit reports and access copies, you can go to AnnualCreditReport.com and provide some basic information to verify your identity (things like your date of birth, Social Security Number, and address).
Once your report is ready, you should see a detailed list of all open and closed accounts in your name, your payment history, recent credit activity and more.
Protect yourself from identity theft
There are many reasons why checking your credit activity is important, but chief among them? That’d be the prevalence of data breaches in today’s world — not to mention the risk of identity theft they come with.
“In the past, it was perfectly acceptable for people to check their credit history once a year, but now with security breaches happening on a regular basis, consumers should be monitoring their credit more closely than ever,” said Clint Lotz, president and founder of TrackStar.ai, a predictive credit technology firm.
Lotz said the Equifax breach — which exposed over 147 million Americans’ personal information in mid-July 2017 — is the perfect example of why watching your credit report is important as far as identity theft protection goes. The pandemic, he said, adds an extra layer of risk to things.
“It took them [Equifax] months before they even realized they had been hacked, and considering that they hold files on hundreds of millions of Americans, it’s fair to say that many identities were stolen by the time they caught up to it,” Lotz said. “With many of us worrying about very serious issues not related to our credit, it’s a prime time for that stolen data to be put to work by bad actors in slow, methodical ways and in the hopes that nobody notices it.”
More reasons to check your credit
Checking your credit health often isn’t just good for detecting fraud alerts and to protect your identity, though. You can also monitor your report for errors — things like inaccurately reported late payments, for example — and then dispute those with the credit bureau.
If the error gets corrected, it could improve your credit score and make a jump from bad credit to a FICO score that’s more favorable. Not sure of your credit score? Head to Credible to check your score without negatively impacting it.
You can also use your credit reports and scores to monitor your financial habits — like the timeliness of your payments or how much debt you have left to pay off. Both of these factors can play a big role in your score, as well as how likely you are to get approved for loans, credit cards and other items.
“If you’re taking out a loan, getting insurance or even applying for a new job, checking your credit will allow you to see an overview of what would be seen by others looking at your credit,” said Leslie Tayne, a debt relief attorney with the Tayne Law Group. “Staying up-to-date on your credit reports and information allows you to know exactly where you need to improve.”
Want to be sure your credit is stellar before applying for a loan or insurance policy? Consider Credible’s partner product Experian Boost, which lets you use positive payment history on utilities, streaming and other bills to improve your credit score.
Set up a monitoring service, too
Though checking your credit reports manually is smart, you should also consider signing up for a credit monitoring service. These consumer financial services check your credit information and score regularly and alert you of any changes.
If you’re interested in monitoring your credit or improving your score, head to Credible and learn more about how Experian can help. You can also use Experian Boost to get credit for on-time bill payments.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Do Personal Loans Have Penalty APRs?
Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.
The Blue Cash Preferred® Card from American Express, for instance, has a 13.99% to 23.99% variable APR, but the penalty APR is a variable 29.99% (see rates and fees). Penalty APRs usually last for at least six months, but card issuers often reserve the right to extend them — especially when you continue making late payments. A look at the terms for the Citi® Double Cash Card show us that the “penalty APR may apply indefinitely.”
Penalty APRs are certainly not a trap you want to fall into, but it’s not something you usually have to worry about if you have a personal loan. Personal loan lenders can, however, charge late fees upwards of $39 per late payment. Whether your loan charges late fees all depends on how good of a loan you qualify for, and that comes down to your credit score, borrowing history and ability to make your payments.
Personal loans also tend to charge lower interest rates than credit cards, too. The average personal loan interest rate for two-year loans is currently 9.46% according to Q1 2021 data from the Federal Reserve, compared to 15.91% for credit cards.
Typically, interest rates for personal loans range between roughly 2.49% and 24%, but personal loans for applicants with bad credit can come with even higher APR — so do your research before applying.
Other common personal loan fees include:
- Interest: The monthly charge you pay to borrow money
- Origination fee: A one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs
- Late fee: A one-time fee charged for each payment that you fail to make by the due date or within your grace period
- Early payoff penalty: A fee incurred when you pay off your balance faster than planned (because the lender misses out on months of expected interest payments)
As you can see, personal loans can be costly, even without a penalty APR. It’s obviously best to avoid paying extra fees whenever possible. That’s easier to do when you have a good to excellent credit score, since you’ll qualify for better loan options.
None of the loans on our best personal loan list charge origination fees or early payoff penalties, but some may charge late fees.
Find the best personal loans
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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