Soft credit searches explained

Being rejected for credit can be a frustrating experience, but what you may not realise is that whether your application is accepted or rejected, it will be recorded in your credit history. This can affect your credit score and potentially your future chances of getting credit. Here we explain what credit searches are, why they matter to your credit history and what a ‘soft’ credit search means.

What are credit searches?

When you apply for credit a lender will run a check on your credit history to find out more about your history of borrowing. This is referred to as a ‘credit search’ or a ‘credit check’ and you may also hear the term ‘search footprint’ used to refer to the information that is left behind when you make an application.

Lenders run credit searches to see how much credit you already have available and how consistent you have been in making repayments. They will also be looking out for things like County Court Judgements, Debt Relief Orders or bankruptcy, which would indicate more serious problems with your ability to keep up repayments. The information on your credit report won’t determine a lender’s final decision on its own, as each lender has their own criteria and decision making processes, however, it will inform their decision to a degree.

How do credit searches affect your credit history?

Each time someone performs a credit search, it is recorded on your credit report and can be seen by other organisations. The reason credit searches are significant is that certain patterns may indicate a reliance on credit or even desperation. Applying for several different credit cards in a short space of time might indicate that someone is trying to get more credit than they can afford. Multiple searches may even indicate fraudulent behaviour, potentially as a result of someone having their identity stolen.

Credit searches are only one aspect, among many, that makes up a credit report, so it is not necessarily the case that making one or two searches in quick succession will have a drastic effect on your credit score or ability to get credit. Lenders are also more interested in recent activity, so if you last applied for credit a year or two ago, this won’t be as significant as a recent spate of applications.

If you have a history of using credit responsibly and have kept up with repayments, you’ll help increase your credit score and the chances of lenders viewing you favourably.

Who can perform a credit search?

Whenever you apply for credit, whether it’s a personal loan, a credit card or a mortgage, a lender is likely to perform a credit search. Searches cannot be carried out without you first giving your permission, so if you do see searches in your credit report that you don’t recognise, you might want to raise this with whoever supplied the report.

As well as financial institutions, your credit report can also be checked by mobile phone networks or mail order companies, who are supplying you with products or a service that relies on payment by credit. Landlords and employers can also perform credit checks, but will not have access to the same information as lenders, they will be able to confirm your identity and see information from public registers, i.e. the County Court Judgement (CCJ) Register or the Insolvency Register.

What is a soft credit search?

Not every instance of your credit report being checked by a lender will result in a visible ‘footprint’ being left on your report. There is such a thing as a ‘soft credit search’ or a ‘soft credit check’, which is recorded in your credit history, but is not visible to lenders. This includes things such as identity checks and quotations, where a company confirms the details you have provided are correct when offering you a quote e.g. for an insurance policy.

There are also eligibility tools offered by websites like Money Saving Expert or by high street banks, that can check how likely you are to have your application accepted without performing a full credit search. Identity checks, quotations and other types of soft search are recorded on your credit report so that there is a transparent record of who has been viewing your credit history, but do not affect your creditworthiness.

If you are interested in checking details of your credit history, including past credit searches, you can get online access to your credit report with the FREE Equifax Credit Report & Score product which is free for 30 days and £14.95 a month thereafter.