What is a soft credit check?
A soft credit check or soft credit search is when a lender checks your credit report for something specific. This could be whether you keep up to date with your loan repayments or other credit commitments. Soft searches are sometimes called a ‘quotation search’.
A soft credit check will show the following:
- Your payment history
- Loan or credit card details
- Current levels of credit or debt
Often, companies perform a soft search credit check to find out whether you would qualify for one of their products before you complete an application. This is known as checking your eligibility. If you complete an eligibility checker on a lender’s website, this will tell them and you whether it’s worth you applying for that product.
A soft search credit check will show up on your credit report, but it can only be seen by you. This means it doesn’t matter how many soft searches you do, as each lender will only know about their own search. When you check your own record this is also seen as a soft search. Your credit report may also be accessed to identify you.
What is a hard credit check?
A hard search credit check is more thorough and detailed than a soft credit search, and it gives the lender the chance to search your entire credit report, including all loans and credit products. Lenders might perform a hard check to find out if you’re someone who has a history of managing money and debt well, or whether your track record shows that you’re likely to be a high-risk borrower. Hard searches can sometimes also be called a ‘credit application check’.
Hard searches are recorded on your credit report, so it’s important not to apply for too many credit products in a short space of time if those applications will trigger a hard search. Try to remember that it’s not just lenders who might carry out a hard search as utility companies and mobile phone providers might too.
On a positive note, if you’re searching for a new mortgage and lots of lenders run a hard search on you in a very short space of time, credit agencies will notice this. They understand that this kind of sudden activity is perfectly normal, and that it doesn’t mean you’re in financial trouble or desperate for credit. For this reason, they’ll group together those credit searches and class them as one single hard search on your credit record.
The differences between soft and hard credit checks
The difference you really need to know about is that soft searches aren’t visible to companies, but hard searches definitely are. No matter how many soft searches are made on your credit report, it won’t damage your credit score.
Hard credit searches do show up to companies and can count against you by lowering your credit score. Lenders get nervous if they think that you apply for credit too often. This can suggest that you’re desperate for credit. Lots of hard searches on your credit report will make you look like a high-risk borrower and can damage your credit score. A lower credit score can limit the kinds of credit that you can apply for.
Here’s a quick summary of those differences:
