soft credit checks

Soft credit checks explained: How they affect your credit file

Soft credit checks, or soft credit searches as they are also known, occur when a company or person checks your credit report as a background check.

It looks at key pieces of information to check your credit worthiness enabling lenders to assess whether or not you will be successful in applying before going ahead with a full credit check, which thoroughly examines your credit report.

When a lender performs a full credit check on your credit report, they’re looking to see how you’re managing credit now, as well as how you’ve managed it in the past.

That search is recorded on your credit file for other lenders to see.

If, for instance, you have made several applications for credit in a short space of time, it could suggest to other lenders that you are in urgent need of credit which you may go on to struggle paying back.

What can I do?

When you need finance but don’t want to affect your credit report by making applications, and by having to apply in full makes it’s extremely difficult to shop around for the best deal out there.

Interest rates are determined by your credit score and, frustrating as it is, quite often you won’t know the interest rate until the end of the application – by which point there is already a footprint of the search left on your credit file.

This is where a soft credit search can be hugely beneficial for someone looking for credit.

What are soft credit checks?

A soft credit check/search, sometimes known as a ‘Quotation Search’ , takes a snapshot of your credit report without leaving any visible footprints on your credit file that a lender can see (you can still see them).

It looks at key pieces of information to check your credit worthiness, lenders can then assess whether you would be successful in your application before carrying out a full examination of your credit report.

Final word

Unfortunately, not many companies conduct a soft credit check.

There are some that do, such as Creditplus, and are ahead of current trends in financial regulation.

With most companies still performing a full credit search, it is difficult to shop around for the best deal.

If you are working to repair your credit report, or are just building one for the first time, choosing a company that give you the option to perform soft credit checks are a great option.

You can see what they’re offering without the risk of ruining the work you’ve put into repairing your credit file.

It also gives you the freedom to shop around and find yourself the best possible deal.

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