credit score

A company has one main reason for conducting credit checks: to determine whether or not the customer is creditworthy. Let’s face it, most companies want to offer credit checks as an application acceptance strategy. Allowing businesses to have peace of mind by running a credit check can be invaluable. To do this they need to understand how to offer credit checks and identify potential applicants who may have a credit history that doesn’t align with the company’s goals. 

There are several ways to do this including carrying out traditional trade credit checks, offering a soft credit check, requesting a simple email from the applicant and For most businesses and companies, offering a soft credit check is the best option as it doesn’t affect the client or applicant’s credit score like a hard credit check does. So how do you go about doing this? The best way to conduct a credit check is to go through third-party credit reporting services. Having access to credit check APIs acts as the middleman between the business and the credit report database. 

What is a Hard Credit Check?

A credit check is a report that provides information on an applicant’s credit history. It includes information like their payment history, outstanding debt, and other factors that indicate whether the applicant is likely to be able to repay the loan. Accessing a traditional credit score can actually affect a person’s rating so more and more companies are turning to a soft credit check to verify clients or candidates without negative ramifications. 

What is a Soft Credit Check?

A soft credit check is a background check that does not affect your credit score. The information gathered from a soft credit check can be used to verify identity, determine employment history and perform other background checks. It can also be used to determine whether you have any outstanding judgments or liens against you, but it won’t affect the information on your credit report. A soft credit check can be conducted by a credit reporting service or a soft credit check API. A soft credit check is non-invasive and only checks the applicant’s name, address, age, and the last four digits of their Social Security number.

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Why Companies Should Offer Soft Credit Checks

According to the Bureau of Labor Statistics (BLS), companies spend approximately $20 billion each year on background checks for employees and contractors. The BLS estimates that this figure will continue to rise as more companies adopt these practices and as more people enter the workforce. Businesses are beginning to see the long-term benefits of having credit checks for a myriad of reasons to save themselves time and money. 

Credit reporting services provide access to an extensive amount of personal information that can be used in conjunction with soft credit checks to review potential candidates before they’re hired. When you offer soft credit checks as part of your hiring process, you’ll be able to make better hiring decisions and avoid costly mistakes down the line — such as those outlined below:

Hiring someone who doesn’t know how to work with others: A bad hire can cost your company thousands of dollars in lost productivity and additional training costs if someone isn’t properly trained on their first day at work. By offering soft credit checks you can see if your client or a potential hiring candidate shares the same goals and values as your business. 

Quick and easy to complete, a soft credit check can help you keep things moving with your business without a lengthy process. Adding a soft credit check to the list of looking into new hires or into accepting new clients can be as quick as putting in their personal information to an API system and receiving the report. 

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How to Offer Credit Checks

Companies that offer soft credit checks should use a service like Credit Reporting Services (CRS) or one of its many competitors to access their customers’ data from Experian, TransUnion or Equifax. CRS charges a small fee for each transaction and gives you access to an API that makes it easy to retrieve data from any of the three bureaus.

With basic information, companies can request a soft credit check through a credit reporting service and start the process to vet their prospective customers or employees. Third-party help can speed things along so you can get back to what matters, conducting business. 

Credit reports save companies money in the long run. Whether it’s avoiding hiring someone who has a shaky credit history or not doing business with a client who is known not to pay bills, these pieces of information are critical for success. This not only will help you avoid poor business practices but can save a series of headaches that come with a bad deal. 



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