When someone requests access to your credit report, this is called a credit search. But while a soft credit check has little impact on your finances, a hard credit check can cause a lasting impact.
Knowing how a hard credit search can affect you is important to maintaining a good credit score. The more hard searches you unknowingly trigger, the worse your credit score will become and the less likely you’ll be to get approved for credit.
What is a hard credit search?
When a lender makes a complete search of your credit report, it will be recorded as a hard credit search (also known as a credit check or credit inquiry).
Each hard credit search is marked on your credit file, meaning that any company searching for it will be able to see that you’ve applied for credit and can use this information to decide whether to lend to you.
The impact of a hard credit check can be unavoidable, but too many hard credit checks within a short space of time can affect your credit score, making lenders wary of entering into a credit agreement with you as it indicates that you’re reliant on credit.
Typically, a hard credit search will be carried out when you apply for a mortgage, credit card, personal loan, mobile phone contract, utility supply, or rental property. Companies must also give you notice before they perform a hard credit search, meaning it should never happen without your permission or take you by surprise.
What is a soft credit search?
In comparison, a soft credit check is often performed when a full review of your credit report is not required. This usually happens when you apply for insurance, use price comparison websites, get a mortgage agreement in principle, or check your own credit report.
They can also occur when a company or individual checks your credit report as part of a background check. This might happen if a company that you already have a credit card with checks your eligibility for credit card offers or your employer checks your credit history before hiring you.
No matter how many soft checks you have, only you can see them and they won’t affect your credit score in any way. This means that you can check your credit score as many times as you like without affecting your ability to secure further credit.
How much debt do you have?
How long do hard searches stay on credit file?
Once a hard check has been completed, it will usually remain visible on your credit report for 12 months. However, it can be up to two years if the check is carried out by a debt collection agency.
During this time, anyone viewing your credit report will be able to see the hard credit search as well as whether the application was accepted or rejected. Lenders can then use this information to decide whether to give you credit.
In most cases, one hard search is unlikely to make too much of a difference to your chances of getting approved for credit. However, as previously mentioned, too many hard searches within a short period can make lenders wary of approving your credit application.
Can I get a hard search removed from my credit file?
While you can get certain things removed from your credit report in some circumstances (e.g. defaults or court judgments issued in error), you can’t usually remove a hard credit search if you were the one who made the credit application.
However, it’s worth remembering that most hard inquiries will drop off your credit report after a year. So unless it’s likely to impact any immediate financial decisions you make, you can be reassured that any evidence of the hard search will be removed in as little as 12 months.
It’s important to keep an eye on your credit report and report any hard searches you don’t recognise as this could be a sign of identity fraud or theft. These instances should be reported to the relevant credit reference agency as soon as possible to allow them to investigate and update your record accordingly.
How do I report a fraudulent hard search?
As previously mentioned, it’s important to regularly monitor your credit report from each of the three credit reference agencies (Experian, Equifax, and TransUnion) for any information that you don’t recognise or doesn’t look right.
If you do notice a hard search but haven’t made any credit applications in the last few years, you must take action as soon as possible. Failing to take action could lead to you getting rejected for anything from a mortgage to a phone contract.
To report a fraudulent hard search, gather as much information as you can and raise a dispute with the relevant credit reference agency or bank. They will be able to review the problem thoroughly and inform you of the outcome of their investigation.
If you’re not satisfied with the response, you can also get in touch with Action Fraud – the UK’s national fraud reporting centre. They specialise in helping victims of identity theft, credit fraud, cybercrime, and other types of fraud.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
How can I prepare for the impact of a hard credit search?
Unfortunately, the only way to avoid the impact of a hard credit check is to not apply for credit at all. However, there are things you can do to prepare for and minimise the impact of a hard credit search, which we’ve outlined below:
Use an eligibility checker
By using an eligibility checker before applying for credit, you can predict how likely you are to be approved for credit based on some key details about your financial situation.
This can prevent you from needing to make an application and your credit score from being damaged by rejected credit agreements. It can also save you time by ensuring you only apply for the kinds of agreements you’re likely to be accepted for.
Space out credit applications
Applying for credit in itself shouldn’t have too much of an impact on your credit score, but making multiple credit applications within a certain time can indicate that you’re experiencing financial difficulties and cause your credit score to drop significantly.
There is no hard and fast rule about how often you should make credit applications, but the general rule of thumb is no more than once every three months.
It’s also important to note that the impact of a hard credit check diminishes over time as it gradually becomes less indicative of your current financial situation.
Make payments on time
Though it won’t have a direct impact on your credit score, making payments on time can show lenders that you’re a responsible borrower despite having a hard credit check.
Remember, your payment history is the biggest contributing factor to your credit score and can help it recover faster after a period of financial insecurity.
For example, if you’re responsible for the rent and bills for your household, ensuring they come out of your account in full and on time each month can reduce the impact of a hard credit search.
Check your credit report before applying
Carrying out regular reviews of your credit report from all of the main credit reference agencies can ensure you’re aware of your credit score before and after a hard credit check is performed.
If your credit score is already poor, for example, it might not be a good idea to apply for credit and, in most cases, your application will be rejected anyway.
Remember, checking your credit report only counts as a soft credit check and won’t have any impact on your credit score.
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Conclusion
When it comes to your credit score, it’s important you’re aware of the various things that can impact it – both positively and negatively. It’s also important to familiarise yourself with which actions constitute a soft credit check and a hard credit check.
Once a hard credit check has been performed, it will be noted on your credit report for one to two years. This will be visible to anyone checking your credit file during this time, including any mortgage lenders, banks, employers, and landlords. Because it indicates you’re in financial trouble, it can make it difficult to get approved for credit.
Before doing something that will cause a hard credit check, use an eligibility checker, space out your credit applications, make payments on time, and check your credit report. This can help you prepare for the impact it will likely have on your credit score.
