Credit Checks: Do You Know the Difference Between a Soft Search and Hard Search?

Our credit reports are vitally important and can have an impact on several facets of our lives.

The details of your credit file could affect what type of car you’re able to drive, and even where you could live – so understanding what they are and how they are used is crucial.

When lenders access your credit file in an attempt to ascertain whether you are a suitable customer, they will either carry out a ‘hard’ search of it, or a ‘soft’ search.

Only 22% of Brits knew the definition of a hard search when polled by Dot Dot Loans, and if you’re unsure this will hopefully be of some help

What information is on your credit file?

When you take out financial products – it could be a bad credit loan, a credit card, car finance, even a mobile phone contract – the lender will try and check whether you are a suitable candidate to provide finance to.

Your credit report will include personal information like your name, age and address, as well as financial information such as previous products you have used.

A woman working on a laptop

This part is crucial, as lenders will be able to check whether you have been able to meet repayments previously.

If you always meet your monthly payments, it should improve your credit score and enable you to access more finance, and often on better deals.

What is a hard search?

Dot Dot Loans describes a hard search as “a detailed view of your credit report and history” which will show “your current credit agreements and any previous credit agreements you’ve had in the last 6 years and how well you’ve managed repayments on them”.

A hard search will often be carried out when you actively apply for a product, and is often accompanied by an affordability check, where a lender will ask you to detail your monthly income and outgoings to get a clear view of how the new payments will fit into your budget.

Crucially, a hard search will be registered on your credit report, and is a factor used by some lenders. The more hard searches on your report, may make it appear that you are struggling to cope financially – whether you take out the products or not.

A lender will inform you that they’re going to carry out a hard search, but you must make sure you read their information fully so that you’re aware it is happening.

Checking facts with a magnifying glass

Limiting how many hard searches are on your report may be useful for boosting your chances of approval, and this is where soft searches come into play.

What is a soft search?

If you check your own credit file, this will be classed as a soft search. Knowing exactly where you stand with your finances on a regular basis will help you make better-informed decisions about which products you can take out – and cut down on the hard searches!

Three major credit agencies will hold your information – Equifax, Experian and TransUnion. You will be able to check your reports with all three for free and if you spot any inaccuracies it’s worth getting them fixed as soon as possible to avoid issues when applying for credit further down the line.

When others take out a soft search of your credit file, it is often referred to as an ‘eligibility checker’ or something similar by lenders and will be used to check whether you meet certain criteria before applying fully.

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