5 min read

What happens when you apply for Credit?

Hannah Salih
22 August 2018

If you’ve recently applied for an offer on ClearScore, you may have noticed that your credit score has been affected. In this article, we explain why this happens, why it’s completely normal and why it’s nothing to worry about.

When you apply for a financial product or for credit, something called a ‘hard search’ will appear on your credit report. It sounds pretty intimidating, but in reality, this occurs when a lending company checks your report before making a decision on whether to accept your application. This shows up on your report and stays there for 12 months.
If you have a lot of credit application searches, a lender may automatically reject you as these applications make it look like you rely on credit to get by, and that you could struggle to pay the money back. Therefore, a hard search can temporarily affect your credit score.

Alternatively, there is a quotation , personal or ‘soft’ search. This type of search is used in background checks or when you check your own report. A quotation search will also be generated when you go on the 'Offers' page in order to display personalised offers for you. These may appear in your ClearScore account under the name of the providers who conducted the search, but will only be visible to you. Quotation searches do not have any impact on your credit score.

As we’ve mentioned above, a dip in your credit score caused by a hard search is nothing to worry about. However, to ensure that you continue to maintain and improve your credit score, you’ll need to keep up with regular payments to lenders; over time, this gives credit providers the confidence that you are someone who can be trusted to pay back on time.

Who can search my report?

Your report is accessible only to the people you authorise to see it. This is normally part of the application process when applying for credit. Other companies and institutions can also search your credit report with permission, either as part of an identity check or for insurance quotations. These are ‘quotation' (soft) searches and therefore they will not be visible to other lenders.

Can I see who searched my report?

Yes, you can see the credit application searches (otherwise known as “hard searches) that have been carried out on your report for up to 2 years.
Searches that you have made yourself are 'quotation’ (soft) searches and aren’t seen by lending companies.
If you don’t recognise a search that shows up on your report, you should contact the lender for more information.

Let’s say I apply for a credit card or a loan. Does the lender see the full details of my report, or only some of it?

When you apply for credit, the lender will carry out a search on your credit report and score. They look at your financial history, see whether you’re high risk or low risk, and then finally decide whether to offer you credit or not.
The lender will be able to see your whole report, except for any personal or quotation searches which are only for you on your personal credit report.

There’s a search on my report that I don’t recognise, what should I do?

If you don’t recognise a search on your report, it could be because other smaller lenders are sometimes owned by larger organisations and are labelled this way on your credit report.

If you have used a price comparison site to search for a product, their terms and conditions sometimes state that a credit search may be carried out by themselves or their partner organisations. This may mean that a search carried out by a company you do not recognise is present on your credit report - it may be one of the insurance companies whose details were shown to you, or it could be a subsidiary of one of those companies (most commonly Aviva or Insurance Initiatives) and is nothing to worry about.

A record of this search will be kept but it won’t adversely affect your credit score.

The best way to see whether this search should be on your report is to contact the lender directly to see why this search is showing up.

Why is there a search from ClearScore on my report?

When you register for ClearScore, a search will be recorded on your report.
A search will also show up once a month with ClearScore’s name on it when your report is pulled.
All of these searches from ClearScore are 'quotation' or 'personal' (soft) searches that are only seen by you and will not affect your credit score in any way. All of these searches will drop off of your report after one year.

by Hannah Salih

Hannah reads all the finance info on the web so you don't have to. She knows all there is to know about your finances but still spends all her money on brunch. 

ClearScore exists to make your finances simple.
We offer a free service where you can handle everything to do with credit in one place. In your ClearScore account, you can see your credit score and the full details of your credit report. Your credit cards, mortgages, mobile phone contracts, loans, overdrafts and utilities all on the record. Our goal is to make ClearScore as simple, calm and straightforward as possible. Money is stressful enough.