Soft and hard credit searches: What’s the difference?

More than four in ten Britons, or nine million people, are at risk of damaging their credit scores by mixing up soft and hard credit searches.

Some 17 percent of consumers are unaware that a search query during a credit application can leave a visible footprint on their credit file, according to new research from Credit One Bank.

According to the study, nearly 14 million people (26 percent) have never checked their credit score, and another three million don’t know if they have.

Among those who checked their credit score, the most common reason, accounting for one in five (19 percent) of searches, was to apply for a credit card, up 6 percent over the past four years.

But it’s crucial to know the difference between soft and hard credit check searches as it can have a very real impact on your money.

What is the difference between these checks?

In a hard credit search, a person’s credit record is thoroughly checked. This leaves a mark for a minimum of 12 months for other lenders to see on a consumer’s credit file. This can harm their credit score and eligibility.

A soft credit check is a less intense look at certain information in a consumer’s credit report that shows whether they are likely to be eligible to borrow.

Crucially, a gentle search will not affect credit score or ability to get loans in the future.

Doing multiple hard searches, such as when applying for new credit cards or loans, especially within a short period of time, consumers can unwittingly hurt their credit scores.

Awareness of the differences between hard and soft searches has declined over the past four years. About 17 percent of consumers surveyed were unaware that a search query during a credit application can leave a visible footprint on their credit record, up from 11 percent in 2019.

Top myths about credit scores and checks

There are many misconceptions about credit reports and scores. An example of this is that denying credit hurts your score.

We asked credit rating agency TransUnion about other common credit rating myths:

Credit blacklists – There is no such thing as a credit blacklist. Credit reports are factual. Lenders have their own policies when it comes to extending credit, and your credit information is only one factor in making decisions.

Credit reporting agencies decide who gets credit – Only the financier can decide to which customers to offer credit. Credit reporting agencies provide only part of the information that lenders use in making the decision.

Past relationships that affect your credit score – Someone else’s credit history can only affect your credit applications if you have previously made a financial connection by having a joint agreement.

Checking your credit score multiple times will corrupt it – You can check your credit score as often as you want without it affecting your score. This is a soft credit check.

How to improve your credit score

There are simple steps you can take to strengthen your credit profile when it’s low.

>Read our guide on how to improve and protect your credit rating

First, make sure you’re on the electoral roll and update it if you move – this is an important step in strengthening your credit score.

Then do not submit multiple applications in a short time. While many credit inquiries (such as those for comparison websites) don’t affect your score, a credit application involves a full credit check, which leaves a footprint visible to other lenders.

Seeing multiple applications over a short period of time can also seem desperate to lenders, so make sure you keep applications apart

It also helps to ensure that repayments are made on time. TransUnion research suggests that more than one in 10 people saw their credit score drop due to a missed payment during the worst of the Covid-19 pandemic.

Make every effort to pay your bills and credit agreements on time to avoid hurting your credit score.

If you have a credit card, you should try to avoid having a high balance on it.

Lenders watch how much credit you use, so if your credit card balance is high, make regular monthly payments and try to pay more than the minimum if possible.

You should check your credit report regularly. To get the best mortgage, credit card or loan, it’s essential to make sure yours is accurate and work to improve your score.