Hard Credit Search vs Soft Credit Search
When someone needs to access your credit rating this is referred to as a credit search, and there are mainly two types of searches that will be carried out, these are known as soft and hard searches. Searches will typically always be carried out when anyone tries to obtain any sort of loan or credit, such as mobile phone contracts, credit accounts and loans these companies more often than not carry out what is know as a hard search and this will reflect on your credit file some companies refer to them as a hard inquiry or pull.
This allows your chosen lender to take a deep look into your credit history, this simply gives them an idea of how reliable you have been when obtaining and repaying credit in the past, this is why it’s super important to keep a good track record when it comes to repayments. It also allowed them to make decisions such as if you're the right applicant for them.
When Is A Hard Search Carried Out?
- Renting A Property
- Monthly Phone Contracts
- Mortgage Applications
- Loan Applications
- Credit Card Applications
It’s important to keep in mind that when someone does carry out a hard credit search this market will reflect and show on your credit file, even when applications are unsuccessful, even if you are successful in your application and decide against it, it will still remain. Meaning any future credit you apply for will be seen by other lenders and companies will be able to see any credit you have tried to access previously and this can benefit or hinder any decisions that are made.
How Are Soft Credit Searches Different?
If you access or look into your credit score this is totally different and is usually referred to as a soft search. A soft search is usually carried out by landlords, employers and companies mostly this allows them to create a picture of how credible you are and whether you’re telling them the truth. In most cases they are also used to check a person’s eligibility, this allows the lender to make a sensible decision when approving your application for any sort of credit. Unlike hard searches, soft searches don’t provide as much information about any past credit history, and other lenders will not be able to see if these have been carried out; this will only be visible to yourself.
Do Hard Credit Searches Affect Your Credit Rating?
If you are constantly applying for credit with the lenders carrying out hard searches then the simple answer is yes this doesn’t look good and can reflect negatively and impact future decisions. Should you only apply for one application every few months then it will usually only take a few points from your score and won’t affect anything dramatically. Too many applications over a short space of time might look like you’re coming across desperate lenders and could potentially affect the decision they make. Remember to always apply and borrow responsibly to avoid future disappointment.