Soft and hard credit checks – What is the difference?

Kreg Bale
Kreg Bale August 12, 2022
Updated 2022/08/12 at 12:23 PM
Soft and hard credit checks

Credit checks can be daunting for anybody. It’s one of the most important things that lenders will assess before loaning you any money. However, did you know that there are two types of credit checks? They are known as ‘soft’ and ‘hard’.

Differentiating between the two can be challenging for many people. To help, we’ve put together a handy guide to help you understand the difference between soft and hard credit checks. Read on to find out more. 

What is a credit score? 

Everyone has a credit score, which is a number that shows lenders how reliable and creditworthy you are. This can help or hinder your chances of securing things like personal loans or mortgages. It’s worth noting that there is not a uniform scoring method across the major credit reference agencies.

However, generally speaking, a higher score means you are more likely to be offered credit and potentially receive better rates too. 

What’s the difference between soft and hard checks? 

Soft checks

A soft check is a top-level view of your financial history and is often done during the following: 

  • When you check your own credit score
  • When a lender checks to see what loans you may be eligible for 
  • When a company is performing an identity check on you 

These checks shouldn’t impact your credit score and aren’t visible to other lenders.

Hard checks 

These are more impactful searches of your credit report and are most commonly done when you apply for a loan, mobile contract or sign up to a utility company. It considers your financial history and can include any previous loans and overdue payments, which will be a key indicator of how you act as a borrower. 

Hard credit checks can be harmful to your credit score if you continue to be turned down for loans, so be sure not to make too many credit applications in a short space of time. 

In summary…

Securing funds from a lender can give you a much-needed short-term financial boost. However, you must ensure you can afford the monthly repayments to avoid harming your credit score.

Hard and soft checks are essential to borrowing but knowing how to navigate around them is the real challenge. Don’t harm your credit history and only do your soft and hard checks when you need to.

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