Hard vs Soft Credit Checks

One of the most ill understood concepts for most consumers is that of a hard credit check.

What is it?

Why is it bad?

How is it different from a soft credit check?

Put simply, when lenders or someone else accesses your credit file, it leaves a footprint.

If the check that’s been run is a ‘soft check’, then that footprint is only visible to you and the person running it. Which means it can do no harm. If, however, the check that’s been run is a ‘hard check’, then it leaves a footprint that everyone else who accesses your credit file can see. This one is bad.

When you get a ‘quotation’ for a product on MoneySuperMarket, or another aggregator site, this typically leaves a ‘soft check’ footprint. When you actually apply for the product, for example on a bank website, this leaves a ‘hard check’ footprint.

Having a hard check footprint is not necessarily a bad thing. It means your credit score will go down temporarily. What’s bad is having multiple hard check footprints. This not only has a stronger detrimental impact on your credit score, but more importantly, it’s seen as a classic sign of desperation by other lenders.

How many hard checks is too many? 1-2 over a 3-6 month period is OK. Anything more than 2 is problematic. You may not see it, but lenders when they look at your credit file, will see how many hard checks you’ve had:

a) in the past 3 months b) in the past 6 months c) in the past 12 months The lesson here is that if you get rejected for a product that you applied for, don’t rush into applying for another one immediately. Take your time. The more times you’re rejected, the harder it’ll be to get anything.