Credit Checks Canada: Hard vs Soft

Jack Prenter, Founder of Dollarwise

Credit checks in Canada are a crucial method of determining your overall financial health. They are routine procedures where lenders and landlords evaluate your credit history. This assessment helps in determining your reliability as a borrower or tenant. 

Hard credit checks are thorough evaluations, often initiated when you apply for loans, mortgages, or credit cards. They can slightly impact your credit score and usually require your consent.

Soft credit checks are less invasive. They might occur when you’re getting pre-approved offers or during employment background checks, and they don’t affect your credit score.

Knowing the difference between these checks, how they’re used, and their effects on your credit history is essential for devising financial strategies and making informed financial decisions. 

What are credit checks?

If you want to borrow money or access services requiring financial commitment, the provider, like a bank or landlord, will conduct a credit check. This process involves examining your credit report, which is a detailed record of your credit history.

The credit report includes several key components:

  • Credit Accounts: Details of your current and past credit accounts, including loans and credit cards.
  • Payment History: Record of how consistently you’ve made payments on time.
  • Credit Utilization: How much credit you’re using compared to your available limits.
  • Inquiries: A list of entities that have requested your credit report.

Credit checks serve a dual purpose. They protect the entity extending credit or services from potential losses and help them make informed decisions based on your financial behavior. For you, the consumer, a credit check can be a gatekeeper to accessing various financial services. 

It’s a tool that reflects your financial reliability and influences the terms and conditions of the credit offered, like interest rates and repayment schedules.

Lenders, credit card companies, landlords, and even some employers use credit checks as part of their decision-making process. The outcomes of credit checks can have long-lasting impacts on your ability to access financial products and services. 

But when it comes to hard and soft credit checks in Canada, there are a few differences that you need to consider. 

Understanding soft credit checks

Soft credit checks are a less invasive form of credit inquiry. They typically occur in situations where a thorough credit evaluation isn’t required. These checks provide a basic overview of your credit history without delving into the detailed analysis of hard checks.

Key characteristics of soft credit checks include:

  • Non-Impact on Credit Scores: A major aspect of soft checks is that they don’t affect your credit score. This feature makes them favorable for initial screenings.
  • Limited Information: These checks offer a summary of your credit report, providing enough insight for the inquirer to make an initial assessment.
  • No Consent Required: Unlike hard checks, soft credit checks can be performed without your explicit consent, often happening without your knowledge.

Soft credit checks are common in various scenarios:

  • Pre-Approved Offers: Credit card companies and lenders might use soft checks to see if you qualify for certain offers.
  • Employment Background Checks: Employers sometimes conduct soft checks to understand how well you manage your finances.
  • Checking Your Credit Score: When you check your own credit score or use monitoring services; these are typically soft checks.

Soft credit checks allow companies to assess your creditworthiness without impacting your credit score, providing a balance between access to information and protecting your credit standing.

Understanding hard credit checks

Hard credit checks are more in-depth examinations of your credit history, usually initiated when you apply for credit, like a loan, mortgage, or a new credit card. They provide a detailed view of your financial stability and creditworthiness.

Characteristics of hard credit checks:

  • Impact on Credit Scores: Unlike soft checks, hard checks can slightly lower your credit score, especially if there are several in a short period.
  • Detailed Information: These checks give lenders a comprehensive look at your credit history, including your payment habits and how you manage debt.
  • Requires Consent: You must authorize a hard credit check, typically done when you apply for credit.

Situations that commonly involve hard credit checks include:

  • Loan Applications: Applying for personal, car, or student loans usually triggers a hard check.
  • Credit Card Applications: When you apply for a new credit card, the issuer will likely perform a hard credit check.
  • Mortgage Applications: Seeking a mortgage for a home purchase involves a hard check.

The impact of hard checks on credit scores varies but is typically minor. However, having too many hard inquiries in a short time can raise red flags with lenders, as it may suggest financial distress.

Let’s see how hard credit checks compare to soft credit checks:

CharacteristicSoft Credit CheckHard Credit Check
Credit Score ImpactNoCan slightly lower credit score
Consent RequiredNoYes
Typical UsesPre-approved offers, background checksLoan, mortgage, credit card applications
Detail LevelBasic overviewDetailed analysis
VisibilityVisible only to youVisible to lenders

Managing your credit checks

Managing credit checks contributes to your overall credit health. Here are some strategies and insights to help you navigate this aspect of your financial life:

  • Monitor Your Credit Report: Regularly checking your credit report helps you stay informed about your credit status. It also allows you to spot any errors or inconsistencies that might affect your score.
  • Space Out Applications for Credit: Since hard credit checks can affect your score, it’s wise to apply for credit sparingly and space out your applications. This approach prevents the appearance of financial issues that might concern lenders.
  • Understand the Credit Check Type: Before consenting to a credit check, ask if it’s a hard or soft inquiry. This knowledge helps you anticipate the potential impact on your credit score.
  • Limit Unnecessary Credit Applications: Apply for new credit only when necessary. Unnecessary credit applications can lead to multiple hard checks, which might negatively impact your score.
  • Maintain Healthy Financial Habits: Paying bills on time, keeping credit card balances low, and managing debts effectively (at least paying the minimum payments) are key to maintaining a good credit score. Good financial habits reduce the need for frequent credit applications, thereby minimizing the number of hard checks.
  • Be Informed About Pre-Approved Offers: Understand that pre-approved offers usually involve soft checks. These offers do not affect your credit score unless you decide to proceed with the formal application, which may involve a hard check.

By adopting these strategies, you can ensure that credit checks work in your favor. 

Examples of how credit checks impact your credit score

Understanding the impact of credit checks can be best illustrated through real-life scenarios. These examples offer a glimpse into how both soft and hard credit checks play out in everyday financial situations.

Scenario 1: Applying for multiple credit cards

  • Situation: Alice decides to apply for several credit cards over a month.
  • Credit Checks: Each application results in a hard credit check.
  • Impact: Her credit score drops by 5 to 10 points for each inquiry, as multiple hard inquiries signal potential financial instability to lenders.
  • Lesson: Limiting the frequency of credit applications can help maintain a healthier credit score.

Scenario 2: Seeking a pre-approved loan offer

  • Situation: Bob receives a pre-approved loan offer in the mail.
  • Credit Checks: The lender performed a soft check to pre-qualify Bob.
  • Impact: There’s no effect on Bob’s credit score from the soft inquiry.
  • Lesson: Pre-approved offers are usually based on soft checks and do not impact your credit score unless you decide to apply, triggering a hard check.

Scenario 3: Regular credit monitoring

  • Situation: Charlie regularly checks his credit score online.
  • Credit Checks: These are soft inquiries.
  • Impact: His score remains unaffected, regardless of how often he checks.
  • Lesson: Regularly monitoring your credit score is a good practice and doesn’t harm your credit standing.

Scenario 4: Shopping for a car loan

  • Situation: Dana is shopping around for the best car loan rates.
  • Credit Checks: Multiple lenders perform hard checks over a short period.
  • Impact: If done within a 14-45 day window, credit scoring models often consider this as rate shopping, treating multiple inquiries as a single one, thereby minimizing the impact on her credit score.
  • Lesson: Consolidating loan inquiries into a short period can reduce the negative impact on your credit score.

In these scenarios, the impact of hard credit checks can vary. While a single hard inquiry might lower your score by 5 to 10 points, the effect can be more pronounced with multiple inquiries. 


In conclusion, understanding the intricacies of credit checks—both hard and soft—is a fundamental aspect of financial literacy. These checks play a significant role in shaping your credit score, which in turn influences your ability to access various financial services. 

Hard credit checks, necessary for applications like loans and credit cards, can slightly impact your credit score, especially if numerous checks are conducted in a short period.

On the other hand, soft credit checks provide a basic credit overview without affecting your score, commonly used in situations like pre-approved offers or employment background checks.

Regular monitoring of your credit report, spacing out credit applications, understanding the types of credit inquiries, and maintaining good financial habits are strategies that can help you sustain a healthy credit score. 

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