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Types of credit search - a handy guide

A credit search is when a company or third party looks at your credit report to find out about your history of borrowing and managing credit. There are two main types of credit search that credit card lenders may complete:

  1. Quotation search or soft credit check - these are searches that are sometimes used to check eligibility before a full application.
  2. Full credit check - searches to complete credit report assessment, commonly used for credit applications.

What is a credit report?

A credit report is a record of information about your credit history which shows lenders how you’ve handled borrowing in the past. It helps them assess your level of risk when deciding whether to lend to you.

Every aspect of your borrowing history, like how well you’ve paid back debts in the past, is factored in to your credit report, which helps lenders make a decision.

What is a soft credit check?

A soft credit check is a quick search that gives lenders information about you, which is basically a quick view of your credit history, rather than the full report. Soft searches are usually made when:

  • A lender wants to check your eligibility for one of its credit facilities.
  • An employer needs to verify your identity before hiring you.
  • You apply for insurance on a pay monthly basis.
  • You want to see your own credit report and credit score e.g. using services like Clear Score, Credit Expert or Noddle.

Although you can see footprints of soft searches on your credit file, other lenders won’t take these into account when deciding whether to lend to you.

What is a full credit check?

A full, or hard, credit check is a thorough credit report assessment, usually carried out by a lender or a credit card issuer when they’re deciding whether to accept your application. Full searches tend to be made when:

  • You apply for credit such as a mortgage, a credit card or a loan.
  • You open a new utility account or a mobile phone contract.
  • You take out finance on things like a new car or sofa.

These searches are fully visible to other lenders, and too many can affect your ability to obtain credit.

Do credit checks affect your credit score?

A soft credit search won’t affect your rating, as lenders will not be able to see these when assessing you for credit. You can have lots of soft searches on your credit report without it having an impact on your overall score so you can shop around for the best deal.

However, a full search may have some impact on your credit score. Multiple full searches in quick succession could lead to lenders thinking you’re desperate for credit, even if this isn’t the case. Searches can stay on your credit report for between 12 and 24 months depending on the particular credit reference agency.

What other factors affect my credit score?

Every lender has its own scoring system, but you’ll usually score higher if you’re:

  • Employed in the same job/at the same company for a long time.
  • A home owner or have lived for a while at the same address.
  • Able to show you’ve been able to make repayments on previous borrowings.
  • Registered to vote.

Your credit score will play a big role in your financial wellbeing, so take time to build it. You’re more likely to be approved for credit and get the best possible terms and rates. Find out more about credit reports here.