Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What type of credit check allows lenders to gauge potential loan rates without impacting a borrower's credit file?

1. Hard search

2. Soft search

3. Standard search

4. Deep search

The correct answer is: Soft search

A soft search is used by lenders to assess a borrower's creditworthiness without affecting their credit score. This type of inquiry does not appear on the borrower's credit report and is typically conducted for pre-qualification or initial assessment purposes. It allows lenders to give potential borrowers an idea of what loan rates they might qualify for while ensuring that the borrower's credit file remains unaltered. In contrast, a hard search is associated with formal loan applications, and it impacts the borrower's credit score, potentially lowering it. The terms "standard search" and "deep search" do not typically refer to recognized types of credit checks in standard lending practices, further underscoring the relevance of soft searches in maintaining the integrity of a borrower's credit history while still enabling lenders to perform initial evaluations.