Understanding the Soft Credit Check: What You Need to Know

When you apply for financial products, you’ll likely face credit checks. It’s important to know the difference between soft and hard credit checks. This helps you manage your credit score. This guide explains what a soft credit check is, how it works, and why it matters.

What Is A Soft Credit Check?

A soft credit check is also known as a soft credit search or soft search. It lets lenders see your credit history without affecting your credit score. Soft credit checks can’t be seen by other companies. They won’t impact your future credit applications. Only you can see them on your own credit report.

Lenders may perform a soft credit check when you apply for a loan or service. It gives them an initial look at your finances. This helps them decide if your application might succeed.

Soft credit checks let companies view some info from your credit file. They don’t leave marks that other lenders can see. This makes them perfect for checking if you qualify before you fully apply.

When Are Soft Credit Checks Used?

Soft credit checks are used in many cases:

• Pre-approval checks: When lenders check if you qualify for a loan or credit card
• Quotation searches: When you look for quotes for insurance or loans
• Background checks: When employers or letting agencies verify your identity
• Self-checks: When you check your own credit report or score
• Mobile phone contract applications: When phone companies assess you
• Credit monitoring: When services check your credit score for you
• Insurance quotes: When insurers verify your details

These soft searches help companies make early choices. They won’t hurt your credit score.

What Does A Soft Credit Check Show?

A soft credit check shows basic details about you:

• Name and address
• Date of birth
• Work history
• Electoral roll info
• Some details of your financial history
• Bank account details (sometimes)

A soft credit check gives a quick view of your money situation. It doesn’t show the full picture that a hard credit search would. The info helps companies make first judgments. They usually need a hard check before final lending choices.

Unlike a hard search, a soft check won’t show your full credit history. This limits what companies can see while still giving enough info for early decisions.

How Does A Soft Credit Check Work?

Soft credit checks happen when you apply for loans, credit cards, or other money products. Lenders do them to see if you might get a loan or other credit.

Soft searches usually use an automated checking system. The system gets limited info from credit reference agencies like Experian, Equifax, and TransUnion. Since it’s a “soft” inquiry, it won’t hurt your credit score.

The process works like this:

1. You apply for a product or ask for a quote
2. The company does a soft credit check
3. The credit agency gives some info about your money history
4. The company uses this to make an early choice
5. The soft search shows on your own credit report, but other lenders can’t see it

Soft checks often don’t need your permission. This differs from hard checks, which do need your okay first. Hard credit checks happen during the formal loan process.

Soft Credit Check vs Hard Credit Check

Knowing the difference between soft and hard credit checks is key:

Lenders use hard checks for full loan applications. Soft checks help with quotes or checking if you might be approved. Actual approval needs a hard credit check. This shows up in your credit history for other lenders to see.

Most hard searches stay on your report for up to 12 months. Soft searches are only visible to you. They don’t impact your credit score.

What Are the Benefits of Soft Credit Check?

Soft credit checks offer many perks:

When you check your own credit record, that’s a soft search too. This means you can watch your credit score often without hurting it. Soft credit searches can also show if someone has misused your personal details. You might spot identity theft through soft searches.

When you do a soft credit check, you’ll see if anyone else has tried to access your info.

Soft credit checks help lenders assess your money history safely. They can see if you qualify for products without making you apply fully. This helps avoid rejections that might hurt your score.

Soft credit searches have many other benefits:

• You can check several loan options without harming your credit score
• They help with mobile phone contract applications
• Soft searches appear on your own credit report so you can track who’s checking you
• You’ll see all inquiries from the past year, but other companies won’t see these
• You can shop for the best rates without getting multiple hard searches in a short time

Soft credit checks help when comparing money products. You can see which ones might accept you without risking many rejections.

Will I Pass a Soft Credit Check?

There’s no simple “pass” or “fail” for a soft credit check. The result depends on:

1. The lender’s rules: Each company has different needs for approval
2. The product you want: Bigger loans like mortgages have stricter rules than small loans
3. Your money history: Your income, current debt, and payment record all matter
4. The info on your credit report: Errors could affect the result

If your credit score is good and your money history is stable, you’ll likely pass a soft credit check. Even with less-than-perfect credit, some lenders specialise in helping people with lower scores. But they usually charge higher interest.

Checking if you qualify through soft credit checks before applying helps. You can focus on products you’re more likely to get. This avoids unneeded hard searches.

Should I Be Worried About Soft Credit Checks?

No, you shouldn’t worry about soft credit checks. They don’t leave marks on your credit file that other lenders can see. They won’t affect other credit checks or hurt your chances of getting credit later.

Soft credit checks won’t impact your credit score. You’ll still see who has checked your credit history when you review your own report. This helps you track who’s looking at your info.

Even many soft credit checks in a short time won’t hurt you. Unlike hard searches, where too many applications quickly can signal money problems, soft searches don’t send this signal.

It’s still good to track which companies do soft searches on your credit file. This is especially true if you didn’t allow them. Searches you didn’t approve might show fraud.

What Can Employers See on a Soft Credit Check?

When employers do a soft credit check during background checks, they see limited info:

• Your name, address, and birth date to confirm who you are
• Electoral roll info to check your address history
• Public records like court judgments or bankruptcies
• Sometimes a brief version of your credit accounts (without details)

Employers can’t see your full credit score or history. The info they get mainly helps verify your identity. They also check for serious money issues that might matter for certain jobs, especially in finance.

Employers must get your permission before checking your credit. They must tell you they plan to do it. This differs from other soft credit checks, which sometimes happen without clear permission.

Does a Soft Credit Check Show Defaults?

Yes, defaults may appear in a soft credit check, but with limits. When a company does a soft credit search, they might see signs of past defaults. They won’t always see the full details that show in a hard credit search.

The level of detail visible depends on:

1. The type of soft search: Some show more info than others
2. The company doing the search: Different groups have different access levels
3. Why they’re checking: Credit checks might show more than identity checks

When you check your own credit report (a soft check), you’ll see all defaults. When a lender does a soft check for a quote, they may see signs of defaults without all the specific details.

If you worry about defaults affecting your applications, check your own credit report first. Then use tools that do soft searches to find products you might qualify for.

How Many Soft Credit Checks is Too Many?

Unlike hard credit checks, there’s no limit to how many soft credit checks you can have. Soft credit searches don’t affect your credit score. Other lenders can’t see them. Having many soft checks won’t directly harm your credit profile.

Each soft search does show that you’re thinking about getting credit or using money services. If you check your chances for many products quickly, this will appear on your own credit report. Other companies won’t see this pattern.

The real issue comes when soft checks lead to many hard credit checks. If you apply for several credit products soon after soft checks, the hard searches could hurt your credit score.

Best ways to use soft credit checks:

1. Check if you qualify before applying
2. Focus on products where soft checks show you have a good chance
3. Space out actual applications (which cause hard checks) when possible

How Can I Check My Credit Score?

Checking your credit score is easy. You can contact the three main credit agencies in the UK: Equifax, TransUnion, and Experian. Access their credit report services by phone or online.

Many services offer free credit score checks. These count as soft searches on your credit file:

• Credit agency websites often give free access to your basic credit score
• Some banks offer free credit score checking as part of their services
• Credit monitoring services provide regular updates on your score

When you check your own credit score or review your credit report, it counts as a soft search. You can check your score as often as you like without hurting your credit rating.

Regular checking of your credit score helps you:

• Track credit rating improvements
• Spot possible fraud
• Find errors that need fixing
• Understand what affects your ability to get credit

Can a Soft Credit Search Be Carried Out Without My Knowledge?

Yes, a soft search can happen without you knowing or agreeing in many cases. But don’t worry – soft checks won’t impact your credit score. Soft inquiries are harmless to your credit rating.

Companies might do soft credit searches in various cases without telling you:

• When sending pre-approved credit offers
• When checking if you qualify for better services
• During routine account reviews (for current customers)
• When insurance companies prepare quotes

While these searches can happen without you knowing, they will show on your own credit report when you check it. This lets you see who’s looking at your info.

For some soft searches, like those for jobs or rental screening, companies must get your permission first. These rules help protect your privacy while letting the financial system work well.

Not All Lenders Will Run Hard Credit Checks

You might be surprised that not all lenders do a hard credit check when you apply. Some financial companies use soft credit checks instead of hard credit searches, even for final approval of certain products.

Some lenders use open-banking to assess if you qualify. This offers another way besides credit agencies. Open banking lets customers share their real-time money info safely. This helps lenders verify your income, spending habits, and other key money details.

Some companies that might use only soft credit checks include:

• Some mobile phone companies for contracts
• Certain utility providers for new services
• Some credit card providers for pre-approved offers
• Certain types of short-term lenders

For more about other ways lenders assess applications, see our guide on open banking.

We hope this article has helped you understand soft credit checks and how soft credit searches work.

For more info on these topics, feel free to ask questions.

Disclaimer: Please note, we are not providing financial advice. Our blogs are written for information only.