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Understanding credit: Soft credit checks explained

Understanding credit: Soft credit checks explained
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Understanding how your credit score works can be key to the overall health of your personal finances. Have you ever wondered about the difference between a soft credit check and a hard one?

Don’t worry. We’re here to break down what it is, who conducts it and what it means for your credit score.

What is a soft credit check?

A soft credit check happens when you check your own credit score, or a company checks it as part of a pre-approval process.

The key thing to be aware of is that it is not as detailed as a hard credit check. And it will not impact your credit score. In fact, only you will be able to see it on your credit report.

What’s the difference between a soft credit check and a hard one?

Soft credit checks are the precursor to a hard credit check. They also don’t do as much of a deep dive as a hard credit check.

A soft search is conducted just to confirm the information you have provided in a quote process or as part of a pre-application procedure. So it might be done to check whether your home address and your date of birth are correct.

The biggest difference is that, while a hard credit check leaves a visible footprint which could impact your credit score, a soft search doesn’t.

Who would conduct a soft search?

If you check your credit score through any of the three credit rating agencies (Equifax, Experian or TransUnion), then this would be classed as a soft search.

Other than that, these checks can be carried out by a company looking at your credit report as part of an identity check. A landlord or a prospective employer might do a soft search.

Alternatively, they can be carried out by banks or lenders as part of a pre-approval process. Lenders will often use these to check your eligibility for a credit card or a loan.

How long does it stay on my credit report?

While a soft credit check is only visible to you on your report, you may still want to know how long that footprint will remain. The answer is that soft searches stay on your credit report for 12 months.

This is a lot less than the two years a hard search stays there.

What does it mean for my credit score?

The good news is that it has absolutely no impact on your credit score. Multiple soft credit checks can be carried out and they won’t make any difference to your credit score.

However, if you are concerned about your credit score, there are ways to improve it.

And just remember, hard credit checks do leave a footprint and can sometimes negatively affect your score. So if you apply for a credit card or a loan, and a hard search is conducted, this will show up on your credit report for banks and other lenders to see.

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