What is a hard and soft credit search?

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A credit search, or credit check, is when a company looks at information on your credit report to learn more about your financial behaviour.

There are two types of credit search:

• Soft search
• Hard search

What is a soft search on your credit report?

A soft search is a check on your credit record that is not visible to other lenders. This means soft searches have no impact on your credit score or any future credit applications you might make.

You will be able to see any soft searches that have been carried out when you check your own credit report. Soft searches will remain on your credit record for 12 months.

Who carries out soft searches?

A company may carry out a soft search on your credit report to:

• Check your identity
• Complete pre-employment identity checks
• See if you’re eligible for certain offers
• Confirm the details you have provided
• Generate an insurance quote through a price comparison site

A soft search will also be recorded when you check your own credit record.

Smart searches

Soft searches are sometimes known as “quotation searches” or “smart searches”.

Some lenders, brokers and comparison sites – including MoneySuperMarket - offer smart search tools to help you check your eligibility before you apply for a credit card or loan. MoneySuperMarket’s Eligibility Checker will ask you to enter a few details, such as your name, date of birth, address and employment details.

This information is then used to carry out a soft search on your credit record. The search results subsequently presented to you will show you how likely you are to be accepted for each credit card or loan.

What effect does a soft search have on your credit record?

A soft search lets you check what credit deals you’re most eligible for without affecting your credit score. This can stop you applying for the wrong products, being rejected and harming your credit record.

There’s no limit to how many soft checks you can make and they won’t affect your credit score, even if you have lots of searches close together.

What is a hard search on your credit report?

A hard search is a check on your credit record that is visible to other lenders. This means it could have an impact on your credit score and future applications for credit that you make.

A company should ask your permission before carrying out a hard search on your credit report.

Who carries out hard searches?

A company may carry out a hard search on your credit report when:

• You apply for a loan, credit card or mortgage
• You apply to open an account with an utility company
• You apply for a pay-monthly mobile phone contract
• You apply to rent a property

What effect does a hard search have on your credit record?

The more credit applications you make, the more hard checks will appear on your credit report.

This will have an effect on your credit score and affect the likelihood of you getting credit in the future.

Lots of credit applications in a short space of time may make companies think you’re in financial trouble, that you rely too much on borrowing, or that you’re a high risk customer.

Most hard searches stay on your credit report for 12 months.

What information is included in a hard search?

When a hard search is made on your credit report, the following information is recorded and shown on your file:

• The organisation name (e.g. Shop Direct Finance Company Ltd)
• The type of company (e.g. A mail order company)
• The date of the search (e.g. 5 November 2019)
• Who to contact if you were not aware of or did not consent to the search (e.g. The organisation which carried out the search)

This information on a hard search can help you monitor your credit file and be alert to any credit searches you didn’t give permission for – this can be a useful fraud prevention measure.

Credit search mythbuster

Myth 1: There’s a credit blacklist

This isn’t true. There is no universal list of people who won’t be accepted for credit. Every lender has its own criteria and their own reasons for rejecting or accepting applications.

Myth 2: Checking my credit score regularly will affect my credit file

This isn’t right. Checking your own credit score results in a soft search – this can’t be seen by lenders and won’t affect future credit applications.

Myth 3: Credit reference agencies decide who gets credit

This is incorrect. Credit reference agencies hold information on your financial past – but they don’t make lending decisions. Lenders use the information provided by credit reference agencies to make their decision.

Myth 4: Where you live affects your credit score                              

This has an element of truth. Lenders like stability so if you keep moving house they won’t view you as favourably as if you stayed put at the same address. But addresses aren’t blacklisted, the same way that people aren’t blacklisted.

Myth 5: Who you live with affects your credit score

This isn’t true. Your flatmates or partner won’t affect your credit score if you keep your finances totally separate. However, if you have joint financial products, such as a mortgage or current account, there will be a “financial association” and their score will affect your score.

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