The basic answer to this question is that a soft credit pull does not impact the consumer’s credit score, while a hard inquiry does. In the traditional sense, when the finance team at a dealership pulls a hard inquiry, there are generally two things that are happening. The consumer is applying for financing and the dealership takes their information and pre-screens them for financing. Since the consumer applied for a firm offer of credit, this will affect their score.
In terms of a soft inquiry, there are a couple different methods of when a soft pull can occur. There is what’s referred to as a consent based soft pull (Pre-Qualification), the instant screen(Pre-Approval) soft pull, and the batch screen (Pre-Approval) soft pull. The bottom line with all three of them is they do not impact the consumer’s credit. In terms of the consent based soft pull, which is the industry standard and most common, a name and address is all that is needed to view the full credit report. A social and DOB are not required. The difference is in the language as the consumer is seeing if they applied for credit, would they get Pre-Qualified.
As times have changed, consumers are more credit knowledgeable and they want to shop without harming their score. In the context of soft pulls for auto dealers, they could use this market behavioral change and turn shoppers into pre-qualified leads. Dealers can leverage consumers’ curiosity of a pre-qualification of an auto loan from their digital marketing efforts and turn these shoppers into buyers. Also, in tandem, dealers can manage their leads more efficiently because they are able to view the consumer’s full credit report in real time. Yes, that is right, a full credit report off a soft pull for an auto dealer. Although, the consent based soft pull report does not take the place of a hard inquiry because of compliance reasons, dealers can use this as a valuable tool to leverage consumers’ curiosity into selling more cars, deliver quickly, and hold gross on their deals.
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