A high majority of consumers today browse multiple websites before deciding to visit a store or purchase online. If the item they are looking for has a high price tag, financing, or paying over time for the purchase may be desirable. Many businesses know that consumers purchasing higher priced items often want/need to pay-over-time for the purchase. So, offering consumer financing online is common place. What many consumers don’t know is that how some businesses offer financing can negatively affect the consumer’s result.

“Hard” versus “Soft” Credit Pull

There are two ways lenders can assess your credit profile when you apply for financing. These methods both utilize the credit bureaus – Experian, Equifax, and/or Transunion – but how they do it is significantly different.

A “soft” pull is really an inquiry by the lender to the credit bureau for your credit profile. This inquiry matches the applicant’s credit attributes with the lender’s required ranges of these attributes to see if they match. Only the applicant can see who has run a soft pull.

A “hard” pull, on the other hand, is a lender actually requesting your complete credit file from the bureau. This allows them to get the details about your credit history. This also results in a credit inquiry being listed on your credit report for others to see.

The Pros and Cons of Credit Pulls

Soft credit pulls have become popular as a way to assess an applicant without hitting their credit report. It’s good for the applicant, fulfills the need of the lender, and allows both parties to determine if there is a fit prior to a hard credit pull being performed. The problem is that many businesses post on their website their lender’s actual credit application. If a consumer completes and submits the application, this will result in a hard credit pull.

More shoppers are browsing websites online before they decide which merchant(s) to purchase from. Not only are shoppers wary of having their credit pulled but, they also haven’t fully committed to shopping the merchant’s store. Therefore, most merchants that post their lender’s credit application online will get a high percentage of fraudulent or bogus applications.

On the other hand, platforms that offer soft credit pulls from multiple lenders give online shoppers a much higher comfort level. They can quickly and easily check to see if they qualify for a personal loan without the negative result of a hard credit pull.

A Sweet Way to Pay!

SweetPay provides just this type of platform. SweetPay has multiple lenders up and down the credit score spectrum that only conduct a soft credit pull initially to see if they qualify for loan offers.  The merchant and SweetPay lender partners will see a significant improvement in both the quantity AND quality of applicants as a result of this process.

~ David Weyher