7 min read

Understanding credit checks: hard searches and soft searches

Hannah Patnick
3 February 2017

Our guide to everything you need to know about credit searches.

The main reason you have a credit report is so that lenders can look at this information (with your permission) when they need to make a decision on whether or not to lend to you.

Lenders will use your credit report to assess the level of risk they’re taking on when they lend to you. They’ll look at things such as if you’ve paid back your debts in the past, how you’ve paid it back (e.g. on time or late) and how much debt you currently have. Lenders will look at your credit score too, but since this is only giving an indication of what’s in your credit report, they won’t use your credit score alone to make a lending decision.

It won’t always be lenders that want to look at your credit report. Sometimes other types of companies may ask your permission to check your report, such as a potential employer or landlord, if they want to see how well you handle your finances. Debt collection agencies may also check your credit report if they’re trying to find out more information about you.

We’re going to talk about the checks that lenders and other companies carry out on your credit report and which of these might affect your credit score.

Checking your own credit report does not affect your credit score."

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What is a search?

Searches, also known as credit checks, are when someone looks at your credit report to find out about your borrowing history.

There are two types of searches which we’re going to explain here - soft searches and hard searches.

Soft searches (also known as soft checks or quotations searches)

A soft search is a preliminary credit check. It means a lender will search for some information about you, but will not see all of your credit report information.

These types of credit checks are not visible to prospective lenders and only you can see them. You can have unlimited soft searches on your credit report without it having any impact on your credit report or score.

You can see these on your credit report for a period of 12 months.

These are all types of soft searches:

  • When you check your own report, e.g. through ClearScore.com
  • When your report is accessed for the purpose of an identity check
  • When a lender wants to show you your eligibility for a new financial product (always check this carefully, to avoid a mark on your report).

Hard searches (also known as hard checks or credit application checks)

A hard search is when a lender takes a full look at your credit report (and score). This type of credit check leaves a mark on your credit report, so whenever prospective lenders look at your credit report they can see you applied for credit (and whether you were accepted).

Most hard searches stay on your report for 12 months (though a debt collection is visible for a period of 2 years).

These are the common reasons someone may carry out a hard search on your report:

  • When you apply for a loan, a credit card or a mortgage
  • When you open a new utility account (including mobile phone contracts). If you’re not sure, check with your provider to find out whether they carry out soft or hard checks on your account.

It’s very common for a hard search to have an impact on your credit score – but as long as you keep borrowing responsibly then this impact should only be short term.

If you make several applications for credit in a short period of time, this may have an even greater impact on your credit score. This is because having several hard searches carried out in quick succession may appear to anyone looking at your credit report that you’re desperate for credit, or that you’re suddenly struggling with your current debt.

Even though this may not be the case in reality, this makes you appear to be a riskier person to lend to. Not only is this likely to impact your credit score, but it may also mean you’re rejected for credit or you’re only offered credit at a higher interest rate.

Avoiding unnecessary hard searches

Frustratingly, you often won’t know the exact interest rate or credit limit you’ll be offered until you’ve had a hard search carried out on your credit report. This isn’t helpful if you’re trying to avoid making multiple credit applications.

However, if you use an eligibility checker before you apply, you can make smarter decisions about which products to apply for and which to avoid. (Eligibility checkers use soft searches so you can do this as much as you want). Some brokers will also show you the credit limit you’re likely to get offered before you apply, which means you can also make applications based on products that you know are likely to give you the credit limit you want.

You can use ClearScore's soft search technology to check your eligibility for products before you apply.

Checking your search history

Your credit report will always show when someone has checked your report.

You find this on your ClearScore account in the searches section of your report.

Checking over your searches history may be helpful if you’re wanting to carefully plan any credit applications. This will help you avoid applying multiple times in a short period (which could negatively affect your credit score). Checking your searches history can also help you identify early signs of identity fraud in the event that someone is trying to take out credit in your name.

by Hannah Patnick

In her previous life Hannah was a consumer journalist making primetime television shows. Now she's ClearScore's Content Producer. Amongst her many talents, Hannah is famed for her excellent tea-making skills.

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