Introduction: What are credit searches and why do they matter?
When you interact with financial products, like checking your eligibility or applying for credit, companies often look at your credit report. This check is called a credit search or credit check. Understanding the difference between the two main types – 'soft' searches and 'hard' searches – is really helpful for managing your credit health. Knowing the difference empowers you to understand how checking your score or applying for products might affect your credit report.
Soft Credit Searches Explained
Think of a soft credit search as a background glance at your credit report. It gives lenders or companies a general overview of your financial standing (sometimes called creditworthiness) but doesn't go into deep detail.
Who performs soft searches? These are typically carried out when:
You check your own credit report or score (for example, using the MoneySuperMarket Credit Monitor service).
Companies check your eligibility or provide a quote for a product before you formally apply (like seeing if you're likely to be approved for a credit card).
Sometimes during identity verification checks.
How do soft searches affect your credit score? Great news – soft searches do not affect your credit score at all. They are not visible to lenders when you later apply for credit, so you can check your eligibility or your own score as often as you like without any negative impact.
Hard Credit Searches Explained
A hard credit search is a much more thorough check of your credit report and history. This happens when you've formally decided to apply for a credit product.
Who performs hard searches? Lenders carry out hard searches when you submit a full application for products like:
Mortgages
Loans (personal, car finance etc.)
Credit cards
Some rental agreements or mobile phone contracts.
How do hard searches affect your credit score? Hard searches leave a record on your credit report that other lenders can see. While one hard search might only have a small, temporary impact on your score, making many applications that trigger hard searches in a short space of time can lower your score more significantly. This is because it can sometimes look like you're urgently seeking credit or taking on potentially unaffordable amounts of debt.
Checking Your Score with MoneySuperMarket
When you use MoneySuperMarket's free Credit Score service to check your credit score and report, this always uses a soft search.
No impact on your score: You can check your score through Credit Score as frequently as you wish, safe in the knowledge that it won't harm your credit history or affect your ability to get credit in the future.
Stay informed: Regularly checking your score is a positive step towards managing your finances, helping you spot any issues early and understand how lenders might view your creditworthiness.
Key Takeaways and Next Steps
Understanding the difference is simple:
Soft Searches: Like a quick look, often used for eligibility checks or when you check your own score. They do not impact your credit score.
Hard Searches: A deep dive used when you formally apply for credit. Multiple hard searches in a short period can temporarily lower your score.
Being aware of this helps you manage your credit applications wisely.
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