There are two types of credit checks: a soft credit check and a hard credit check.

Soft Credit Check: A soft credit check, sometimes known as a soft inquiry or soft credit pull, happens when you or someone you authorize checks your credit report. Soft credit checks do not impact your credit score because they aren't attached to a specific application for credit.

One of the perks of using Sparrow is that you can submit a request for prequalified rates with multiple lenders at once to find out what options might be available to you, and it won’t affect your credit score. This is because at the prequalification stage a soft credit check is performed, not a hard credit check.

Hard Credit Check: Hard credit checks are performed by financial service providers when you apply for credit. When you choose to move forward with a specific partner lender, you agree to the lender’s terms of use, disclosures, and other applicable policies.

When you agree to these next steps with the lender, you are agreeing to allow your chosen lender to conduct a hard credit check in order to further assess your creditworthiness and eligibility for the loan product you have chosen. Typically, a hard credit check has up to a 5-point impact on a credit score.

To read more about the different credit inquiries and how they’ll impact your credit score, click here.