Soft Search Credit Check vs Hard Search Credit Check

Updated: June 14, 2024 Author:

Quick answer A soft search credit check is often used when companies run an eligibility check on your credit history, normally to help you understand your credit eligibility or to give you a quote. A hard search credit check is a more thorough search of your credit history. This is conducted when you make a formal application for a financial product. Hard checks can affect your credit score but soft checks do not.

    There are two different types of credit check that you need to know about before applying for credit: a soft credit check and a hard credit check. It’s important that you understand the difference. Otherwise you could find yourself in a situation where lots of hard credit checks have been conducted on you in a short space of time, damaging your credit score.

    What is a Credit Check?

    A credit check is something that companies run in order to analyse your financial situation. It is usually financial providers who do this, typically when you have applied for a product with them. They run a credit check as a part of assessing your affordability. After all, they want to be sure that you are responsible with money.

    A credit check will normally look at information regarding:

    • The credit you already have access to.
    • Your borrowing history.
    • Whether you’ve made payments on time and in full.
    • Your financial associations – so anybody you share a financial product with.

    The types of companies who may run a credit check on you include:

    • Loan and credit card providers.
    • Banks and building societies.
    • Utility companies.
    • Phone providers.
    • Prospective employers, especially if you work in a regulated industry.

    Soft Credit Checks Explained

    Before applying for credit you can use a soft credit check to see whether you are likely to be accepted. This is a basic overview of your credit history, which gives credit providers an idea of whether you are eligible for a financial product that you’ve applied for. Note that it only gives them an idea of your eligibility – they won’t know whether they can definitely offer you the product until you make a full application. On the up side, a soft credit check doesn’t leave a mark on your credit file, so it won’t affect your credit score.

    You can also run a soft credit check on yourself to check out your credit history by using a reputable credit reference agency. TransUnionExperian and Equifax are the three main agencies for consumers in the UK.

    Failing a Soft Credit Check

    Don’t worry if you fail a soft credit check. It simply means that the financial provider doesn’t think that they will be able to offer you the product you wanted. Your credit score won’t go down and other lenders won’t be able to see that you’ve failed a soft credit check. Remember, it isn’t a good idea to apply for a product if you fail a soft credit check in relation to it. You should look for a different product that you may be more suitable for.

    Hard Credit Checks Explained

    Typically conducted to assess your affordability when you apply for credit, a hard credit check is a full analysis of your credit file. It can also be conducted when you are applying for an account with a utility provider or phone company, or even for a job where you have to work under strict regulations. Whichever type of company is conducting the check, they are doing so to see whether you meet their affordability or employability standards.

    A hard credit check will bring up any serious marks on your credit file that may flag you as unsuitable, such as:

    • Late or missed payments.
    • Defaults.
    • County court judgements.
    • Individual voluntary agreements.

    Don’t worry too much if you are applying for a loan and had one late payment five years ago. All companies have different standards of affordability and you can use a soft credit check to test the water.

    Be aware that you can still fail a hard credit check even if you passed a soft credit check at the same company. This is because a soft credit check is just a high level overview and doesn’t dig deep into your finances. Make sure you answer all the questions in any credit applications or eligibility checks honestly to minimise the risk of being rejected.

    Failing a Hard Credit Check

    Whether your application for a financial product is accepted or not, a hard credit check leaves a mark on your credit history. The reason why is simply because the mark shows that you have tried to access credit. Other lenders will want to see if you are trying to take out lots of credit to assess whether you are a reliable borrower.

    You shouldn’t keep applying for credit if you get rejected. Lots of applications in a short space of time can harm your credit score. The odd hard credit check here and there usually only causes a temporary dip, so don’t worry too much. If you’re accepted and make all your payments on time and in full, your score should go back up. But if you’ve made the mistake of applying for lots of credit already, there are things you may need to do to increase your credit score.

    Why Should I Get a Soft Credit Check?

    You should get a soft credit check in order to see whether you’re likely to be accepted for a financial product before applying. Doing so will give you peace of mind because you don’t have to worry about being rejected and your credit score dropping.

    Quick tip: A soft credit check is also sometimes referred to as an eligibility check on lenders’ websites. It is exactly the same thing and won’t harm your credit score. Again, formally applying after the soft search will result in a hard search and this could impact your score.

    Final Thoughts on a Soft Search Credit Check vs a Hard Search Credit Check

    You should always get a soft credit check before formally applying for credit to see whether you are likely to be accepted. This will help you assess whether it is a good idea for you to apply for the product. You can also use a credit reference agency to make sure your credit score is high before shopping around for financial products. Having a good credit score will help you access better rates.