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Understanding credit checks: hard enquiries and soft enquiries

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

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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 whether 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.

This is when someone looks at your credit report to find out about your borrowing history. There are two types of enquiries which we’re going to explain here - soft enquiries and hard enquiries.

These types of credit checks don’t affect your credit report and are not visible to prospective lenders. You can do multiple soft enquiries without it having any impact on your credit report or score.

There are different types of soft enquiries:

  • When you check your own report, e.g. through ClearScore
  • When your report is accessed for the purpose of a background check, e.g. when you apply for a job
  • 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).

A hard enquiry is when a lender and some insurance providers take a full look at your credit report (and score) with your permission. The most common reason that a lender would do a hard enquiry is to assess whether to approve your application for a loan or a credit card. 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 enquiries stay on your report for 12 months.

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 enquiries 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, it 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.

Get free alerts on hard enquiries when you register with ClearScore.

Frustratingly, you often won’t know the exact interest rate or credit limit you’ll be offered until you’ve had a hard enquiry 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. The upside is that eligibility checkers are soft enquiries so you can do this as much as you want and it won’t affect your credit report. You can check which products you’re eligible for by logging into your ClearScore account.

Checking over your enquiry 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). It can also help you identify early signs of identity fraud in the event that someone is trying to take out credit in your name.

See incorrect information on your report? Raise a dispute and we’ll get back to you as soon as possible.

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.