In the video, the speaker talks about credit scores, who uses them, and how they work. This advice comes from a host who used to be an investment banker.
Banks and credit card companies are some of the most “obvious” of the lenders checking credit scores. A credit checking software will look at repayment histories and whether any payments were missed. This, along with the amount of debt you currently owe, is how they determine borrowing risk.
Potential employers and future landlords may also conduct credit checks. This happens to find out how a person handles their finances. Debt collection agencies also might conduct credit histories to learn more about a person.
Speaking of credit checks, the speaker also explains the difference between two primary credit checks: soft and hard searches. The soft searches provide preliminary information about a potential borrower. It’s one step toward the credit approval process.
Soft credit checks do not impact credit scores. They remain invisible and unknown to other future lenders.
Hard credit checks, on the other hand, will appear to potential lenders for up to 12 months. The hard searches typically only happen during the final stages of applying for a loan, by which time most people would end up approved anyway.
These searches only stay on a credit report for 12 months visible to the user and no one else. This includes times when potential borrowers perform searches on themselves after learning of a credit denial.
