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By Ronica Ruparelia

Hard and soft credit checks explained

2 min
Female student sitting at desk in home holding a mug and using phone

I’ve been working in the field for The Next Step for a number of years. As part of my role, I’m privileged to spend a lot of time with medical and dental students. Quite a few of you have been asking me about credit scores – what they are, how they affect you and how you can affect them.

I penned a blog on credit scores not so long ago and thought I’d follow up with another on hard and soft credit checks.

What is a credit check?

For a company or person (such as a landlord) to find out what your credit score is, they must run a credit check.

In a nutshell, a credit check (also known as a credit search) looks at your credit report to understand your financial behaviour. This includes whether you’ve paid back credit on time, how much credit you currently have and how you are managing it.

Companies that may carry out a credit check include:

  • Banks and building societies
  • Credit providers
  • Utility suppliers (gas, water and electricity)
  • Landlords
  • Mobile phone providers
  • Employers

Checking your credit report regularly is a good way to see what’s helping or hindering your credit score. It can also help you spot errors on your file or any suspicious activity that might indicate fraud.

If you’re looking to apply for finance, there are two types of searches that can be carried out on your credit report – a soft credit check and a hard credit check.

What is a soft credit check?

Soft credit checks happen when you view your own credit report or when a lender checks to see whether you’re eligible for certain products and interest rates. The lender will only see a top-level view of your financial history which allows them to predict any offers you may be eligible for.

The good news is that soft credit checks won’t affect your credit score, or your ability to get credit in the future, so you don’t need to worry about how often they’re completed.

What is a hard credit check?

A hard credit check is made when you apply for credit (such as a loan, credit card or mortgage) or when a service is provided to you (for example, a mobile phone contract or rental property).

This kind of search will be recorded on your credit file because it gathers more information from your financial history and allows a company to check if you have a history of late or defaulted payments. A hard credit check cannot take place without your permission, so you’ll know when it’s happening.

I know many people worry that checking your own credit score may negatively affect it, but this is a myth. As I’ve explained, checking your own credit score initiates a soft credit check and it’s recorded on your credit file.

Only hard credit checks are recorded and you will need to give your permission for those to take place. So, check your credit score whenever you like – it’s good practice to do so!

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