Bankers Factoring only uses Soft Pull Credit Inquiry on your Factoring Application.
- Bankers Factoring only uses Soft Pull Credit Inquiry on your Factoring Application.
- Soft Pull versus Hard Credit Pull by a Factoring Company
- A Bankers Factoring Plan to Build Your Credit
- What is a soft credit pull or inquiry?
- What is a hard credit pull or inquiry?
- Soft pull or inquiry versus hard credit check
- Examples of hard credit inquiries and soft credit inquiries
- Hard credit inquiry examples include:
- Soft credit inquiry examples include:
- How to manage your credit inquiries
- Soft Pull vs Hard Pull Conclusion
Soft Pull versus Hard Credit Pull by a Factoring Company
As banks tighten their lending requirements, more business owners are turning to expensive MCA loans. A cheaper and safer alternative is invoice factoring, also known as invoice financing, to get critical working capital for their business. The time it takes customers to pay you, and the difficulty in collecting payments probably have hurt your credit scores, and you are worried about more hard-pull credit inquiries.
But what if your personal credit is subpar, or you do not want a hard pull on your credit report? Bankers Factoring only does a soft pull during the factoring application process. We do not want your credit to go further down; we understand that your business lacking working capital has hurt your personal credit, too.
Also, read our article on how to apply for payroll financing.
A soft pull is when a lender asks for information that gives the same information as a hard pull without a negative impact on your personal credit score. A soft pull credit check shows the same information you can find on a hard pull credit request. It will show a client’s lines of credit and loans. It will outline their payment history.
These days, most major financial institutions require a hard inquiry when extending financing. Many factoring companies will do a hard pull on your credit report before opening a factoring line of credit.
Bankers Factoring only runs a soft credit inquiry as part of our background check. We understand the damaging impact hard inquiries have on your credit score. We aim to provide fast funding for business owners with credit scores over 525 fico score. Learn more about How To Finance Your Business without Giving up Equity.
A Bankers Factoring Plan to Build Your Credit
As factoring experts, we build a plan that helps build credit for startups, financially distressed business owners, and entrepreneurs with established credit. Complete an online funding application today, and we only run soft credit checks on your company’s owners. We can provide a factoring quote within 24 hours.
Hard pulls will negatively affect your credit score, so limit them. If you have a hard credit check and use it as collateral for a loan, you will have to typically wait 30 days before applying for more credit.
You can check your credit score by getting a free copy of your credit report from each of the three major credit bureaus.
What is a soft credit pull or inquiry?
A soft credit pull, also known as a “soft inquiry,” is a noninvasive check of your credit report. A factoring company typically uses soft inquiries to verify identity and creditworthiness. A hard pull on your credit report indicates that someone has requested access to the information contained in it and can affect your score.
On the other hand, a soft pull does not affect your score; it simply tells the lender whether or not you are who you say you are and if you are worth the risk to lend money to (or not).
Related article: How to Obtain Financing after Business Loan Denial
What is a hard credit pull or inquiry?
A hard credit pull, also known as a “hard inquiry,” is when a company requests your credit report from one or more of the three major credit bureaus (Equifax, Experian, and TransUnion) to determine whether you are eligible for specific products.
A hard inquiry typically occurs when you apply for a loan (such as buying a car or house). Still, it can also happen if you use it for something that does not require an actual loan—like opening up a new line of credit on an existing account.
Financial institutions usually initiate hard inquiries, and card issuers must verify your financial history before approving any deals with you. They may also check to see if there have been any problems with your previous loans or accounts. Hard credit inquiries drop your score under most credit scoring models.
Related article: A Guide to Acquiring a Business Line of Credit with Bad Credit
Soft pull or inquiry versus hard credit check
A soft pull is a request for information about your credit history. This inquiry does not affect your credit score; we use this to verify your financial background. For example, if you apply for a loan, the lender will run a soft pull on your credit history to see if you meet the requirements. The company will run a hard inquiry next to finalize the transaction if approved. This inquiry will appear on your credit report and remain for two years from the release date.
Soft pulls are prevalent today—they occur whenever anyone checks your credit report (for example, when you apply for a loan or mortgage). If no hard inquiries are made within 30 days, they will not affect your score. The good news is that soft pulls have no effect on your score and are considered “non-hard” inquiries by lenders.
A hard pull is an inquiry that requests information from one or more bureaus (eBureau®, Experian®, and TransUnion®). Still, it does not guarantee approval from your funding source.
Related article: 8 Requirements to Qualify for Invoice Factoring Services
Examples of hard credit inquiries and soft credit inquiries
A soft pull or inquiry on your credit report usually does not affect your credit score. A hard credit report, on the other hand, can influence it.
Soft pulls typically occur when you apply for a job, and the employer wants to verify your background information or if someone requests a copy of your credit report.
When creditors such as banks, lenders, and financial institutions initiate hard pulls, they want to check their risk before extending credit to you.
Hard credit inquiry examples include:
- Credit card application
- Bank-owned factoring company
- Auto loan application
- Mortgage application
- Student loan application
- Personal loan application
Soft credit inquiry examples include:
- Checking your credit score on a free app
- Bankers Factoring Application
- Some credit cards companies include your FICO score on the monthly statement
- Pre-Qualified credit card offer
- Pre-qualified insurance plans
- Employment Verification or Background check
How to manage your credit inquiries
Now that you understand the difference between soft and hard pulls, there are some steps to take that will help you avoid unnecessary damage to your credit score.
- Keep track of your credit score. Knowing where you stand concerning the three major credit bureaus (Equifax, Experian, and TransUnion) is essential. This will allow for better decision-making about whether it is worth applying for a loan or other line of credit.
- Only apply for credit if you need it. Applying for new lines of credit can negatively influence your overall score, even if they are not granted or accepted by the institution in question. If there is no good reason someone would be interested in seeing how much money they have available before signing up with them (or buying something from them), then do not bother applying!
- Do not open new accounts unless necessary—only use them when necessary! If possible, only use one card at a time and always pay off balances on time to not add more debt to your finances. This is especially important if you do not have enough money coming in every month due.
Related article: The Due Diligence Process in Invoice Factoring
Soft Pull vs Hard Pull Conclusion
Now that you know the difference between a soft and a hard credit pull, you can better manage your company’s financial health. You can secure fast funding from Bankers Factoring with our soft inquiry.
Generally, it is wise to avoid hard pulls as much as possible because they can hurt your credit score. However, soft pulls do not affect your finances at all. So if you need approval from a vendor or supplier before accepting their invoice for payment, go ahead with our soft pull.
Sell your invoices to a accounts receivable factoring company that wants to help you to build your credit score. We also offer low factoring fees and high advance rates.