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Understanding soft vs hard credit checks

Understanding soft vs hard credit checks

When you apply for a new credit product, whether that be a loan, credit card or mortgage the lender will usually do a credit check before they decide whether to lend to you. This allows them to look at your credit report and review your financial behaviour. There are two types of searches a lender can do – a ‘soft search’ and a ‘hard search’. It’s useful to understand the difference between the two and their impact on your credit report.

What is a soft credit check?

A soft credit check, often referred to as a soft search usually happens when a company checks your credit file as part of a background check without looking at your full credit history. A soft search also happens when you check your own credit score.

The most important thing about a soft credit search is that they aren’t visible to other lenders, this means they have no impact on your credit report or any credit applications you may make. You can have as many soft searches on your credit report as you like, and it won’t affect your score.

Some employers, landlords or utility providers use soft credit searches to get an idea of your financial situation.

What is a hard credit search?

A hard credit search gives a lender a detailed view of your credit report and history, they’ll see your current credit agreements and any previous credit agreements you’ve had in the last 6 years and how well you’ve managed repayments on them. Most lenders will use this information and other factors like affordability checks to help them make a decision on whether to lend to you.

Whenever a lender carries out a hard credit search it will leave a ‘mark’ on your credit report, this means other lenders will be able to see the search and if your application was accepted. A hard search will stay on your credit report for 12 months.

How does a hard search impact my credit score?

It’s best to keep hard credit searches to a minimum as too many in a short period of time may damage the chances of your application being approved. It could imply you are struggling with your finances or reliant on credit meaning it would be a higher risk lending to you.

You should only apply for credit if you really need it and always check the lenders eligibility requirements before you apply. This will avoid you applying for a loan which isn’t suitable for you and having too many hard searches on your credit report.

You should check your credit report regularly, to make sure all the hard searches that are in your report are legitimate ones made by you and not fraudulent.

Could a credit search be carried out without my knowledge?

When applying for credit such as a loan, a lender will confirm to you that they’ll be carrying out a credit search, so make sure you read through your application before you submit it.

In your credit report there’s a section that tells you who has checked your report and when this was done. This allows you to make sure all the applications on there were ones made by yourself.

Do Dot Dot Loans carry out credit checks?

As a responsible lender we carry out affordability and credit checks on all customers when they apply for one of our online loans. Our initial search will only be a soft one though, so we can check your application without having to leave a mark on your credit file. If we make an offer to you and you accept this, we’ll then carry out a hard search to check if the loan is suitable for you. You don’t need a perfect credit history to be accepted, it’s one of several criteria we use to make our decision. Our loans range from £200 - £4000 with fixed repayment terms, apply online and find out if you’ve been initially accepted in minutes.

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