Soft vs hard credit check – what’s the difference?

soft vs hard credit check

Each time you apply for a loan a lender will search your credit report… and your credit score falls.

A ‘footprint’ is left behind when creditors undertake this ‘credit check’. And, other lenders can see these footprints.

One or two searches per year are unlikely to make much difference to your credit score. But several in quick succession means your score could tumble.

Your credit score falls because research conducted by Credit Reference Agencies (CRAs) shows that other applicants behaving in the same way are more likely to miss payments in the future.

If a lender therefore sees that you’ve made, for example, five searches over the last two months – they might conclude that you’re getting desperate for credit or that you’re struggling with your debts. Consequently, you might be declined.

Lenders do not know the outcome of an application (to another lender)…

… but if they see five searches resulting in no new accounts being opened, the assumption might be that all of those applications were declined. With this in mind it will be easier for the lender to decline you too, because everyone else appears to have said ‘no’.

Searches remain on your credit file for up to two years. A search at one CRA (e.g. TransUnion) will not show at another (e.g. Experian).

Soft vs hard checks

More and more lenders are now undertaking soft searches. Also known as ‘soft checks’ or ‘quotation searches’, they only leave a ‘footprint’ on your credit file that’s visible to you.  Companies undertaking soft search only see basic information about your credit history.

Soft searches are also created when you:

  • Look at your own file
  • Need to prove your identity and the provider uses CRA information to do this
  • Obtain a quote for services, including insurance

Hard searches, on the other hand, are full credit checks. In these cases, lenders look at all the information held about you. This determines whether you’ll be accepted for a loan or other service (like a mobile phone).

Whenever possible go for a soft search. They’re not always available, but they’re better for your credit score if you want to shop around, looking for the best deal.

Don’t recognise a search?

If there’s a search on your credit file that you don’t recognise you can report this to the CRA. It might be removed.

Before doing this, though, there are some things to check first.

For example, the company name conducting the search might be different to the one you’ve applied to. They may have a different trading name. Perhaps they belong to a wider Group and you’re dealing with the subsidiary.

Also, a lender may be using an intermediary, that is accessing your data on their behalf. Check the consent wording on the website to see who is actually searching your file.

About Adrian Davies

With a background in money advice, Adrian's been campaigning for fairer finance for 25 years.

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