Hard and Soft Credit Enquiries

18th Mar 2024

Understanding how credit scoring works is the first step in attempting to improve your credit score. Having a high credit score can open doors by allowing you to access a wider range of credit products, and can also translate into potential savings, as often the most competitively priced products are reserved for customers with the best credit scores.

Why Credit Scores Matter

Whether you are applying for large mortgage or a smaller personal loan, your credit score plays the main role in determining your success and which terms you might be offered. Someone with an excellent credit score applying for a mortgage might be able to get an interest rate significantly lower than someone with a borderline credit score. This difference in interest rate could translate into substantial savings over the entire life of the loan.

Credit score numbers typically range from 0 to 999, with a general scale of 300 to 850. The exact numerical scale used will depend on the credit agency being used, as they all score in a different way. We can help you access your credit report, and make sense of the information contained in it.

Difference Between Hard and Soft Credit Checks

A soft credit check is not a firm application for credit. It is often marketed as pre-approval, or an “understand your likelihood” check which you can run to see whether you are likely to succeed or not. As these checks are not a firm application for credit, they have no effect on your credit score and won’t appear on a credit report. On the other hand, a hard credit check is run when you progress to the next stage, and make a firm application for a loan, credit card or mortgage. Looking at your own credit report also counts as a soft check, so there is no penalty on your credit score by getting into the habit of checking the information monthly, or more frequently.

Limiting Hard Checks

Hard credit checks are often unavoidable as these will be run by lenders when you want to take out a new credit product. If you’ve already run your details through one of the affordability checkers, or pre-approval systems, you should have a fair indication of whether you will be approved or not before making the firm application.

Lenders look at hard credit searches to make sure you are not applying for many different loans in a short period of time. This could suggest to them that you have suddenly had your finances get much worse, or that there is some other emergency which has led to multiple applications. Even if you are approved for some lines of credit, this might still affect your ability to secure future credit if lenders think you have overstretched yourself.

Keep on top of your credit score by getting into the habit of regularly checking your own credit report and flagging up any anomalies to the credit referencing agencies. Always try to run soft checks to gauge your chances of success before progressing to a firm application.