The terminology around the different types of credit searches can be confusing. To help make things clearer, we’ve summarised what the difference is between a hard and soft credit search and fill you in on what you need to know about them both.
What’s a soft credit search?
You might see a soft search referred to as a soft check or quotation search.
Types of soft searches include:
- When you check your own credit report, through Noddle for example (you’ll see this in the ‘Search History’ section of your report)
- When your credit report is checked as part of a pre-employment background check when applying for a job (not all jobs require this, so it’s worth checking the application form or asking the recruiter to be sure)
- When a lender wants to check your eligibility for certain credit products
When a lender does a soft search on your report, the information they see on there is limited.
A key thing to know about soft searches is that no matter how many are carried out, it won’t have any impact on your credit score.
You’ll also be able to see a record of what soft searches have been carried out on your credit report in the last 24 months.
What’s a hard credit search?
A hard search is when a lender takes a look at your full credit report and score. They will only do this once you’ve applied to get credit through them. This could be:
- When you apply for a loan, credit card or mortgage
- When you apply to take out a new mobile phone contract
- When you apply for any credit through retailers, for example a store card
- When you buy anything on finance, for example a new car
When a hard search is carried out lenders can see all the information on your report.
This type of check will leave a mark on your credit report so that lenders can see how many times you’ve applied for credit.
A hard search can have an effect on your credit score. However, if borrowing responsibly, there may be little or no impact on your score. If a number of hard searches are carried out on your report in a short space of time, this could damage your score, as it may look like you’re desperate for credit.
Why is it important to know the difference between hard and soft credit searches?
Only by understanding the difference between hard and soft searches can you really grasp how your financial behaviours/actions may or may not affect your credit score.
It’s also important to know so you can keep an eye on your search history to monitor for any searches you don’t recognise. Any hard searches will be listed in the ‘search history’ section of your credit report, so if there’s anything on there that you’re not aware of, then query it with the organisation that has done the search straightaway.
Unfortunately, if your personal details have been stolen, criminals could be applying for credit under your name so it’s a good idea to regularly check this section of your report.
How can I avoid any unnecessary hard searches?
When applying for credit you often won’t know the exact credit limit or interest rate you can get until a hard search has been carried out on your report. To avoid having too many hard searches, it’s a good idea to use an eligibility tool beforehand, so you can have an idea of what products you’re likely to be accepted for.
How do I check my search history?
We keep a record of every search made on your Noddle credit report in the last 24 months and you can view these in the “Search History” section of your report. Either log in or sign up to Noddle to check yours now.
Searches that you ask for on your own file are not classed as credit searches and won’t be seen by lenders.
We hope you found this useful. If you’ve got any more questions around credit searches get in touch by messaging us on Facebook @noddleuk or tweet us @useyournoddle.