Credit Searches

DIFFERENCE BETWEEN HARD CREDIT SEARCHES AND SOFT CREDIT SEARCHES

A credit search is an action performed by a lender to review a person's credit history and credit score to determine whether they are eligible for finance. This j process involves accessing the person's credit report, which is maintained by credit bureaus or credit reporting agencies.

HARD CREDIT SEARCH

A hard credit search occurs when a lender or financial institution checks your credit history in order to make a lending decision. This tends to occur when applying for a loan (such as car finance), credit card, and mortgage. This can impact your credit score, usually causing it to drop a few points. This is because you are seeking new credit, which could increase your risk level to lenders. Hard credit searches are visible to anyone who checks your credit report.

SOFT CREDIT SEARCH

A soft credit search occurs when an individual checks your credit report as part of a background check or pre-approval. In addition, soft searches occur when checking your own credit score. This is used for pre-qualifying for a credit card or loan, checking your own credit score, or being screened by a landlord or employer.

Unlike a hard credit search, a soft credit search does not impact your credit score at all. This is because it is not associated with a specific credit application and, therefore is seen as a less risky activity. Soft credit searches are only visible to you when you check your own credit: report. They are not visible to lenders reviewing your credit.