It’s important as a consumer to understand the difference between a soft credit search and a hard credit search, which is also referred to as a full credit search.
The most important factor to remember is that a soft credit search will not affect your credit score, whilst a hard credit search will.
Hard inquiries generally occur when a financial institution, such as a lender, has conducted a hard credit search in order to get an acceptance in place for the credit you have applied for. A full credit search will typically be performed when you apply for a loan, credit card or a mortgage and will leave a mark on your credit profile often referred to as a footprint.
A hard inquiry will remain visible on your credit profile for two years, and accounts for 10% of your overall credit score. With this in mind, it’s important that you carefully consider your options before making an application for credit as a large number of applications can have a negative impact on your credit score making you appear credit hungry in the eyes of credit reference agencies.
On the other hand, a soft credit search checks the same data that a hard credit search does but without harming your credit profile.
Soft credit searches were invented to give customers an indication on the likelihood of them being accepted for credit, before physically being proposed off to a lender. The main benefit of a soft search is that it allows you to shop around and do some research before making your application.
Soft searches, often occur without you even knowing about them, but there is no need to worry. If you’ve ever received an offer in the post for a credit card, it’s likely that the credit card company performed a soft credit search to see whether you qualified for the card. The same goes for other types of loan offers.
Whenever a soft search is conducted, any inquiry is placed on your report noting that your credit report has been checked. The inquiries are listed in a specific section on your credit report.
When potential lenders check your credit profile they will be unable to see how many inquiries have been made, this means that, within reason, you can make as many ‘soft’ check inquiries you like, without damaging your credit score.
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