Soft vs. Hard Credit Check: What’s the Difference?
Did you know that your credit score can take a small hit from a credit check? When you’re applying for credit, it’s important to know how your credit score will be impacted. Sometimes your credit score takes a hit from credit checks, but other times it doesn’t. Why is that? This is due to the two types of credit checks: soft credit checks and hard credit checks.
But what exactly are the differences between a hard credit check versus a soft credit check? In this blog, we’ll explain the different types of inquiries and what you need to be aware of, so you can navigate credit applications like a pro and build the best credit score possible.
What is a Soft Credit Check?
A soft credit check is like a summary of your full credit report. It gives whoever is checking your credit an overview of your credit report, which is usually enough to make an assessment for things like insurance premiums, utilities, and sometimes employment. It’s also what you see when you check your own credit file.
Soft credit checks don’t have an impact on your credit report. This means you can check your credit score as frequently as you wish, and it won’t have any impact on your score.
What is a Hard Credit Check?
The other main difference between a hard and a soft credit check is that a hard credit check has an impact on your credit score. This is because when you apply for a line of credit, there’s a natural risk of you accumulating or not repaying debt to a creditor. The brief dip in your credit score reflects that potential risk.
In most cases, you don’t need to worry too much about a hard credit impacting your credit score. Unless you apply for several different lines of credit in a short period of time, the impact from a single hard credit check (or credit pull) will be small and short-lived.
Main Differences Between Hard and Soft Credit Checks
Let’s quickly recap the main differences between the two types of credit inquiries:
- Show your full credit report and history
- Are recorded in your credit file
- Have a small and typically short-lived impact on your credit score
- Are pulled when you apply for a line of credit like a mortgage, personal loan, or credit card
- Show an overview of your credit history
- Are not recorded in your credit report
- Have no impact on your credit score
- Are pulled when lenders are checking your eligibility, and sometimes when you apply for a service like utilities or a mobile plan
Credit Check FAQs
Credit checks play a big role in your ability to receive and use credit, and there’s a lot to learn. Here, we take a look at some other common questions about credit checks.
How Often Should I Check my Credit Score?
It’s wise to check your own credit score at least once a year to ensure it’s in tip-top shape. When you assess your credit score, look for unauthorised inquiries that could be having a negative impact on your score. If you notice that something seems wrong, report it to the credit reference agency right away.
How Long Does a Hard Credit Check Last?
Hard credit checks can remain on your credit report for as long as two years. However, the effects of a hard inquiry can go away within months if your credit is in good standing. Part of the reason hard inquiries are required to last this long is so that you have the chance to identify fraudulent ones.
How Many Hard Searches is Too Many in the UK?
If you’re trying to find the best mortgage or auto loan rates possible, you might want to apply for credit with several different institutions. However, you might be hesitant if you know that multiple hard inquiries can hurt your credit score.
Fortunately, VantageScore, which is used by the UK’s three main credit reference agencies, will bundle hard inquiries for a single credit type that are made within 14 days. Try to limit your search to this time period to avoid damaging your credit score with excessive hard inquiries.
Build a Better Credit Score With Pave
At this point, you have a good understanding of how each type of credit check can impact your score and what they’re used for, and you’re ready to apply for that new line of credit. But maybe you ran a soft check and found that your credit score isn’t as strong as you’d like it to be. How can you build it up?
Traditionally, building credit can be hard, but Pave is here to make it easier. Our app’s active credit building reports your timely payments to credit reference agencies to ensure that your score is receiving all the help it can get, while our bills monitoring tool helps you keep track of expenses so you don’t do any damage to your score. Add in personalised credit fixes and what you have is a powerful tool for building credit, without taking out any debt.