Soft vs Hard Credit Checks Explained
Find out how soft and hard credit searches affect your credit score, and when lenders use each type.
Find out how soft and hard credit searches affect your credit score, and when lenders use each type.
Whenever you use a financial service, from checking your eligibility for a credit card to applying for a mortgage, a credit check is usually carried out in the background. But not all credit checks are created equal.
Understanding the difference between a soft and hard credit check is essential for managing your financial health. This guide explains what each one is, when it’s used, and how it impacts your credit profile.
What Is a Credit Check?
A credit check is when a company or organisation looks at your credit report to understand your financial history and behaviour. Lenders use this information to assess how much of a risk it would be to lend you money. The details on your report are used to calculate your credit score, which summarises this risk as a single number.
What Is a Soft Credit Check?
A soft credit search (also known as a soft inquiry) is a toplevel check of your credit report. Think of it as a background glance that doesn’t leave a lasting mark.
- Visibility: Crucially, soft searches are only visible to you on your credit report. Other lenders cannot see them.
- Common Uses: They are used when you check your own credit score, for identity verification by companies, or for an eligibility credit check when a lender wants to see how likely you are to be approved for a product.
- Impact on Score: So, does soft search affect score? The answer is a clear no. You can have unlimited soft searches on your report without any negative impact on your credit score.
What Is a Hard Credit Check?
A hard credit check UK (also known as a hard inquiry or a full search) is a deep dive into your credit report. It happens when you formally apply for a new line of credit.
- Visibility: Unlike a soft check, a hard search is recorded on your credit report for other lenders to see.
- Common Uses: It is performed when you submit a full application for a mortgage, a personal loan, a new credit card, a car finance agreement, and sometimes for tenancy agreements.
- Impact on Score: A single hard check may cause a small, temporary dip in your credit score. However, multiple hard checks in a short space of time can have a greater negative impact, as it may appear to lenders that you are urgently seeking credit.
|
Feature
|
Visibility
|
Impact on Score
|
Typical Usage
|
|---|---|---|---|
|
Soft Credit Check
|
Only you can see it on your report.
|
None.
|
Eligibility checks, identity verification.
|
|
Hard Credit Check
|
Visible to other lenders.
|
Can cause a temporary dip.
|
Full credit applications.
|
Lenders treat them differently because a hard check signals anintent to borrow. A flurry of hard checks suggests a higher risk, whereas soft checks are simply part of responsible financial management and pre-application research.
How to Manage Credit Checks Wisely
You can protect your credit score by being strategic about your applications.
- Use Eligibility Tools First: Always use an eligibility credit check before applying. These tools use a soft search to tell you how likely you are to be accepted, without affecting your score.
- Apply Only When Necessary: Avoid applying for credit on a whim. Only submit a full application when you genuinely need the product and are confident of approval.
- Space Out Applications: Making several credit applications in a short period can lead to multiple hard searches on your file. Some lenders may view this as a sign of increased borrowing activity. Spacing out applications can help avoid this.
What Information Do CRAs Hold?
All three agencies collect similar types of information to build your credit report. This includes:
- Personal Details: Your name, date of birth, current and previous addresses.
- Credit Accounts: A list of your credit cards, loans, mortgages, overdrafts, and some bill accounts (like mobile phones) from the last six years.
- Repayment History: A monthly record of whether you paid on time, were late, or missed payments for each account.
- Public Records: Information like County Court Judgements (CCJs), bankruptcies, and Individual Voluntary Arrangements (IVAs).
- Credit Applications: A record of any “hard searches” made when you formally applied for credit.
How Lenders Use CRA Data
Understanding how lenders use credit data is key. They don’t just look at the three digit score; they analyse the details in your report.
- To Assess Risk: Your payment history shows them how reliable you have been in the past.
- To Determine Eligibility and Rates: The information helps them decide whether to approve your application and what interest rate to offer you. A stronger report usually means a better rate.
- Why Results Vary: A lender might only check your report with one or two CRAs. If there’s an error on your Equifax report, a lender who only uses Equifax might decline you, while a different lender who uses Experian might approve you.
How to Check Your Credit Reports
It’s vital to check your report with all three agencies regularly.
- Free Statutory Reports: Under UK law, you are entitled to a free statutory credit report from each of the three CRAs.
- Check Each One: Because the data can differ slightly between them, checking all three ensures you have a complete picture of your financial profile.
- Dispute Errors: If you find a mistake-like an incorrect address or a settled account showing as active-you have the legal right to raise a dispute with the CRA to have it investigated and corrected.
Final Thought
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About Updraft
Updraft is an FCA-authorised lender and UK-based fintech aiming to help people swap financial stress for a little more headspace. We blend clever tech with practical tools – including ways to help manage and structure borrowing – designed to make money management feel less like a chore and more like getting your life back on track. Find out more about how we’re rethinking borrowing and money management at updraft.com.
Frequently Asked Questions
How long do hard credit checks stay on my report?
In the UK, a hard credit check remains visible on your credit report for 12 months. However, its impact on your credit score typically lessens significantly after the first few months.
Can employers see hard credit checks?
Some employers, particularly in the financial sector, may run a credit check as part of their background screening. However, they must get your permission first, and it is usually a modified report focused on public records (like CCJs or bankruptcy) and identity verification, not your history of loan applications.
Does a soft search mean I'll be accepted for credit?
Not necessarily. A positive eligibility check (which uses a soft search) is a very strong indication that you will be accepted, but it is not a guarantee. The final lending decision is always made after a full application and a hard credit check.
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