Hard vs soft credit checks: What’s the difference?

A credit check – or credit search – is when a company looks at your credit report to see your financial history.

They may use this information to understand how reliable you are at borrowing and repaying money to determine whether they’ll lend to you.

Your credit report contains things like:

• your name

• your address

• your borrowing history

• details of anyone you’re linked to financially

If you’re looking to apply for finance, there are two different types of searches that can be carried out on your credit report – a soft credit check, and a hard credit check.

What is a soft credit check?

Soft credit checks happen when you check your own credit report, or when a lender checks to see whether you’re eligible for certain products and interest rates.

The lender may want a top-level view of your financial history so they can pre-approve any offers, or show you what you could potentially be eligible for.

A soft credit check doesn’t leave a visible footprint on your credit file, but it is recorded. This means no other lenders can see it. A soft credit check won’t impact your credit score, but, you’ll be able to see if anyone has checked your credit history.

If you view your own credit report, this will also come up as a soft credit check. You may find that, in certain industries, employers will want to perform a soft credit check if you’ve recently applied for a job with them. This will depend on the employer.

What is a hard credit check?

If you’ve made an application for finance, such as a credit card, loan or mortgage, the lender will do an in-depth check of your credit report.

What does a hard credit check show?

A hard credit check will look at your financial history so the lender can see your track record of repaying money you’ve previously borrowed.

Any negative marks on your credit report, like overdue payments or debt collection, may stay on your credit report for a number of years.

What’s the difference between hard and soft credit checks?

Soft credit checks aren’t visible to companies, but hard checks are. This means soft credit checks won’t affect your credit score, whereas hard credit checks could.

Keep in mind, lenders will be able to check if you’ve been successful for any credit applications.

If you apply for finance a number of times within a short space of time, it could signal to lenders that you may be struggling to manage your finances.