Yes, Zip does run your credit as part of its application process.
Understanding Zip's Credit Check
When you apply for an account with Zip, they conduct a soft credit pull. This type of credit inquiry is used to review your credit history and assess your financial reliability without negatively affecting your credit score. Unlike a hard credit inquiry, a soft pull is generally not visible to other lenders and does not impact your credit score. While Zip does not specify a minimum credit score requirement, your credit history and score may be considered as part of their overall application assessment. This helps Zip determine your eligibility and potential spending limit.
Soft vs. Hard Credit Pulls
It's important to distinguish between soft and hard credit pulls, as they have different implications for your credit score.
| Feature | Soft Credit Pull (e.g., Zip) | Hard Credit Pull (e.g., traditional loans, credit cards) |
|---|---|---|
| Purpose | Pre-approvals, background checks, identity verification, account management. | Loan applications (mortgage, auto, personal), credit card applications, utility services. |
| Credit Score Impact | None | Can temporarily lower your score by a few points. |
| Visibility | Only visible to you (on your credit report) and the inquiring company. | Visible to all lenders and remains on your report for up to two years. |
| Permission | Often done without explicit permission (e.g., for existing customers). | Requires your explicit permission. |
What This Means for Your Application
Knowing that Zip performs a soft credit pull can help you understand the application process:
- No Impact on Credit Score: You can apply for Zip without worrying about a negative impact on your credit score, which is a significant advantage for those managing their credit carefully.
- Assessment of Financial Behavior: Even without a strict minimum score, Zip uses the soft pull to gain insights into your repayment history and financial habits. This helps them gauge your ability to repay purchases made through their service.
- Approval and Spending Limits: The information gathered from the credit check, along with other application details, helps Zip decide whether to approve your application and set an appropriate spending limit. A stronger financial profile might lead to a higher initial limit.
Understanding that Zip checks your credit with a soft pull clarifies their process and the minimal impact it has on your overall credit health.
