Credit File: Soft Checks vs Hard Checks

Ever wondered what these terms mean and what effect they have on your credit score? Keep reading!


Soft Check


This is a check that is carried out by lenders when you are on places such as price comparison sites. You may be browsing for phone or car insurance for example to see what’s available for you. This check is when you authorize lenders or companies to be able to pull information from your credit file.


These have little to no effect on your credit score as they aren’t attached to any specific application of a line of credit. Depending on the credit reference agency, you will be able to see the soft checks that have been carried out on your credit file.


Soft Checks happen when:

  • You check your own credit score

  • A company checks your score to see if you’re eligible for pre-approved offers

  • One of your current lenders check your credit score

  • You authorize a soft check by a lender


Hard Check


This is a check carried out by lenders when you are looking to take out a new line of credit. This happens when you put in an application for a line of credit such as a credit card, loan or overdraft. Unlike a soft check, these checks are deeper as lenders are looking to understand what type of borrower you are. They are able to deep dive and take a look at your financial history, repayment track record and any current lines of credit you currently have out. They will use this information to decide whether or not to grant you a new line of credit.


For example, if a lender sees that you often make bill payments late or are currently in arrears with an existing line of credit, this may influence their outcome. Because of the nature of the search, hard checks can impact your credit score. If you fail a hard check, your credit score will more than likely fall.


Hard checks remain on your credit file for two years but will only impact your credit score for one. If you do experience a fall in your credit score, responsible financial behaviour will help it to recover over time. If you know you’re looking to apply for a new line of credit such as a mortgage in the next few months to a year, it is advised that you avoid any other credit applications in that time to keep your credit score as strong as possible!


If you'd like to check your credit file, below are some of the main providers in the UK:


Experian

Clear Score

Credit Karma