If you’re currently looking at applying for finance, you may have seen the words ‘hard credit check’ and ‘soft credit check’, but you might not know exactly what that means. There are several key differences, and they affect your credit report differently, so it’s important that you understand the difference.
Throughout this article, you will see ‘hard credit check’ also referred to as a ‘hard credit search’. These are two words for the same thing. You might also have heard a ‘soft credit check’ called a ‘soft credit search’, this too means the same thing.
A credit check is when a company looks at the information held on you to understand your financial behaviour. This will be compiled into what is known as a ‘credit report’.
Companies will only look at your credit report if they have a legitimate reason to do so. An example might be because you’ve just applied for a loan, and they need to do a credit check so they can move forward with your application. Find out what checks are done for car finance with help from our guide.
If you’re currently looking at applying for finance, you may have seen the words ‘hard credit check’ and ‘soft credit check’, but you might not know exactly what that means. There are several key differences, and they affect your credit report differently, so it’s important that you understand the difference.
Throughout this article, you will see ‘hard credit check’ also referred to as a ‘hard credit search’. These are two words for the same thing. You might also have heard a ‘soft credit check’ called a ‘soft credit search’, this too means the same thing.
A credit check is when a company looks at the information held on you to understand your financial behaviour. This will be compiled into what is known as a ‘credit report’.
Companies will only look at your credit report if they have a legitimate reason to do so. An example might be because you’ve just applied for a loan, and they need to do a credit check so they can move forward with your application. Find out what checks are done for car finance with help from our guide.
A credit check will show all types of credit accounts you’ve had, your payment history and other information like credit limits within the last six years.
Lenders can also look at the credit reports of someone you are financially associated with, so for example, anyone you have a joint bank account or mortgage with.
Below you can find an example of companies that may perform a credit search on you:
A credit check will show all types of credit accounts you’ve had, your payment history and other information like credit limits within the last six years.
Lenders can also look at the credit reports of someone you are financially associated with, so for example, anyone you have a joint bank account or mortgage with.
Below you can find an example of companies that may perform a credit search on you:
Some of the reasons lenders conduct a credit such might be to:
A credit check helps a lender understand your eligibility for finance. This includes whether finance would be affordable to you, and if you have good or bad credit.
A soft credit check is an initial look to ascertain information on your credit report. Companies perform soft searches to decide how successful your application would be without conducting a hard search on your credit report.
Some of the reasons lenders conduct a credit such might be to:
A credit check helps a lender understand your eligibility for finance. This includes whether finance would be affordable to you, and if you have good or bad credit.
A soft credit check is an initial look to ascertain information on your credit report. Companies perform soft searches to decide how successful your application would be without conducting a hard search on your credit report.
A soft credit check consists of all the information you can see when looking up your own credit score. It’s simply a snapshot of your credit history.
A soft search will likely include:
Hard searches, on the other hand, provide potential lenders with a much deeper insight into your credit history.
A soft credit check consists of all the information you can see when looking up your own credit score. It’s simply a snapshot of your credit history.
A soft search will likely include:
Hard searches, on the other hand, provide potential lenders with a much deeper insight into your credit history.
A soft credit check will not appear on your credit report to anyone other than you but allows companies to see your eligibility for credit. This is why you can have as many soft searches on your credit report as you like without affecting your credit score.
A soft credit search won’t impact your credit score as it doesn’t appear on your credit report to anyone apart from you. You’re not formally applying for any form of credit, so your credit score won’t take a hit.
Lenders complete soft credit searches frequently, usually to identify who pre-qualifies for finance or a loan. If you look at your credit report on a website like Credit Karma or ClearScore, you’re likely to see lots of soft searches, and none will have an impact on your credit score.
An example of this would be when you get a quote from us for car finance. You can fill in your information, click ‘apply,’ and, in most cases, find out almost instantly how much finance you could get, all from a soft credit check on your file.
Representative 30.7% APR.
If, after that point, you then decide to continue with your application, then a hard credit check would be done. This is not the same for every lender, and some will do a hard credit check on you straight away, so please check with them before applying.
A hard credit check happens when a company makes a complete search of your credit report. Each hard check is recorded on your report, so any company searching will be able to see that you’ve applied for credit.
A hard credit check will often be done after a soft credit check, once you agree to commit to a financial product. However, some companies may do a hard credit check at the point of application, so make sure to do your own research before applying.
Most hard searches usually stay on your credit report for 12 months, although there are some exceptions to this rule. For example, a debt collection search might stay on your report for up to two years, and an IVA, CCJ, or bankruptcy will leave a mark on your credit file for six years.
Hard credit checks can be carried out for lots of reasons, but the most common reasons tend to be when you:
If you are ever not sure whether a soft or hard check will be done, you could ask the provider before applying.
Simply put, a hard search signifies that you have applied for credit and shows other lenders that you might be a financial risk to lend to. Applying for too much credit in a short space of time shows that you might not be able to afford the repayments, which can leave you with a bad credit score.
It’s important to understand that it isn’t just a hard search that can affect your credit score. It can be several things, including whether you are on the electoral roll or even something as simple as if you’ve moved address several times in the last couple of years.
One hard credit check shouldn’t have too much of an impact on your credit score, especially if you are borrowing responsibly and you know you can keep up the repayments.
However, having several hard credit checks appear in quick succession can affect your credit score and may reduce your ability to get approved for credit in the short term. For more information, we’ve written a guide on what affects your credit score.
If your credit score is low and you have a lot of hard credit checks on your credit report, then lenders might offer you a higher interest rate if you are approved for credit.
At Moneybarn, we will only ever perform a hard credit check on your credit file once you’ve found a vehicle you like and are ready to proceed with the finance agreement. At this point, we will generate the documents needed to continue with your agreement, and this is when we will perform the hard credit search on your file.
Hopefully, by now, you are more aware of the difference between a hard and soft credit check. But to sum up:
Always do your research before you take out credit, and make sure you understand if you have good or bad credit. Before applying, see if there’s an affordability calculator on the lender’s website. This can help you understand what you could borrow based on your current circumstances.
If you’re looking for car finance, our car finance calculator will show you what your finance agreement could look like.
There are three credit reference agencies that will provide credit checks to a variety of different organisations, and they all have websites where you can check your credit score and your credit report:
These different credit reference agencies are designed to help you understand if you have bad credit, so you can use them to help you get a better score.
To learn more about credit, our guides should be able to help:
A hard credit search will generally stay on your credit report for around 12 months, according to Equifax.
A soft credit search will only be seen by you on your credit report, and not by third parties such as finance companies.
Checking your own report does not affect your credit score. It’s only hard credit checks that may affect your credit score, and these can only be done by companies and not by you.
You can check your credit score and report as many times as you like. Your credit score will only get updated monthly, but some reports will show you if something has been added or changed before the month is up.
It is only hard credit checks that may impact your credit score. This is because when you take out credit it reduces the amount you can afford. This signals to lenders that you could be in financial difficulty and that you may be relying on borrowing money.
Hard checks are normal, and most people will take out finance or a loan at some point in their life. It is the number of times that a hard check is done on your credit report that you need to be careful with. A hard check will stay on your file for 12 months, but if you keep the hard checks to a minimum, then a hard check could affect your score less.
There is no exact number of hard credit searches that are too many. Every lender is different, and it’s important to only apply for finance that you have researched and that you know you need so that you don’t damage your credit score.
When a lender does a credit check, they will request certain information on you. They will only do this if they have a legitimate reason to do so, and what they receive back will help them decide how responsible it is for them to lend to you.
They check how responsible it would be to lend to someone by looking at things such as:
Soft searches do not affect your credit score and aren’t visible to potential lenders. They will only be visible to you and will remain on your credit report for around 12-24 months, depending on the type of soft search.
A soft search will include forms of publicly available information, including CCJs (county Court Judgment). Other information from a soft search could include IVAs (Individual Voluntary Arrangement) or if you’ve declared bankruptcy in the last six years.
Soft searches are often initiated by others, for example, a lender checking whether you pre-qualify for finance. Soft credit searches will also show up on your report when you check your own credit report on websites like Experian.
These soft searches are only visible to you, so you won’t need to worry about potential lenders seeing soft searches on your credit report.
A soft credit check will not appear on your credit report to anyone other than you but allows companies to see your eligibility for credit. This is why you can have as many soft searches on your credit report as you like without affecting your credit score.
A soft credit search won’t impact your credit score as it doesn’t appear on your credit report to anyone apart from you. You’re not formally applying for any form of credit, so your credit score won’t take a hit.
Lenders complete soft credit searches frequently, usually to identify who pre-qualifies for finance or a loan. If you look at your credit report on a website like Credit Karma or ClearScore, you’re likely to see lots of soft searches, and none will have an impact on your credit score.
An example of this would be when you get a quote from us for car finance. You can fill in your information, click ‘apply,’ and, in most cases, find out almost instantly how much finance you could get, all from a soft credit check on your file.
Representative 30.7% APR.
If, after that point, you then decide to continue with your application, then a hard credit check would be done. This is not the same for every lender, and some will do a hard credit check on you straight away, so please check with them before applying.
A hard credit check happens when a company makes a complete search of your credit report. Each hard check is recorded on your report, so any company searching will be able to see that you’ve applied for credit.
A hard credit check will often be done after a soft credit check, once you agree to commit to a financial product. However, some companies may do a hard credit check at the point of application, so make sure to do your own research before applying.
Most hard searches usually stay on your credit report for 12 months, although there are some exceptions to this rule. For example, a debt collection search might stay on your report for up to two years, and an IVA, CCJ, or bankruptcy will leave a mark on your credit file for six years.
Hard credit checks can be carried out for lots of reasons, but the most common reasons tend to be when you:
If you are ever not sure whether a soft or hard check will be done, you could ask the provider before applying.
Simply put, a hard search signifies that you have applied for credit and shows other lenders that you might be a financial risk to lend to. Applying for too much credit in a short space of time shows that you might not be able to afford the repayments, which can leave you with a bad credit score.
It’s important to understand that it isn’t just a hard search that can affect your credit score. It can be several things, including whether you are on the electoral roll or even something as simple as if you’ve moved address several times in the last couple of years.
One hard credit check shouldn’t have too much of an impact on your credit score, especially if you are borrowing responsibly and you know you can keep up the repayments.
However, having several hard credit checks appear in quick succession can affect your credit score and may reduce your ability to get approved for credit in the short term. For more information, we’ve written a guide on what affects your credit score.
If your credit score is low and you have a lot of hard credit checks on your credit report, then lenders might offer you a higher interest rate if you are approved for credit.
At Moneybarn, we will only ever perform a hard credit check on your credit file once you’ve found a vehicle you like and are ready to proceed with the finance agreement. At this point, we will generate the documents needed to continue with your agreement, and this is when we will perform the hard credit search on your file.
Hopefully, by now, you are more aware of the difference between a hard and soft credit check. But to sum up:
Always do your research before you take out credit, and make sure you understand if you have good or bad credit. Before applying, see if there’s an affordability calculator on the lender’s website. This can help you understand what you could borrow based on your current circumstances.
If you’re looking for car finance, our car finance calculator will show you what your finance agreement could look like.
There are three credit reference agencies that will provide credit checks to a variety of different organisations, and they all have websites where you can check your credit score and your credit report:
These different credit reference agencies are designed to help you understand if you have bad credit, so you can use them to help you get a better score.
To learn more about credit, our guides should be able to help:
A hard credit search will generally stay on your credit report for around 12 months, according to Equifax.
A soft credit search will only be seen by you on your credit report, and not by third parties such as finance companies.
Checking your own report does not affect your credit score. It’s only hard credit checks that may affect your credit score, and these can only be done by companies and not by you.
You can check your credit score and report as many times as you like. Your credit score will only get updated monthly, but some reports will show you if something has been added or changed before the month is up.
It is only hard credit checks that may impact your credit score. This is because when you take out credit it reduces the amount you can afford. This signals to lenders that you could be in financial difficulty and that you may be relying on borrowing money.
Hard checks are normal, and most people will take out finance or a loan at some point in their life. It is the number of times that a hard check is done on your credit report that you need to be careful with. A hard check will stay on your file for 12 months, but if you keep the hard checks to a minimum, then a hard check could affect your score less.
There is no exact number of hard credit searches that are too many. Every lender is different, and it’s important to only apply for finance that you have researched and that you know you need so that you don’t damage your credit score.
When a lender does a credit check, they will request certain information on you. They will only do this if they have a legitimate reason to do so, and what they receive back will help them decide how responsible it is for them to lend to you.
They check how responsible it would be to lend to someone by looking at things such as:
Soft searches do not affect your credit score and aren’t visible to potential lenders. They will only be visible to you and will remain on your credit report for around 12-24 months, depending on the type of soft search.
A soft search will include forms of publicly available information, including CCJs (county Court Judgment). Other information from a soft search could include IVAs (Individual Voluntary Arrangement) or if you’ve declared bankruptcy in the last six years.
Soft searches are often initiated by others, for example, a lender checking whether you pre-qualify for finance. Soft credit searches will also show up on your report when you check your own credit report on websites like Experian.
These soft searches are only visible to you, so you won’t need to worry about potential lenders seeing soft searches on your credit report.
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)