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The basic difference between a soft and hard credit check is that a soft credit check doesn’t leave a footprint on your credit record, while a hard one can leave a mark for up to a year. 

Lenders use hard credit checks to review your full credit record when you apply to borrow money for a personal loan or mortgage. This check can leave a mark on your credit record, and although not necessarily bad, having too many in a short time is unattractive for lenders. 


What is a Soft Credit Check? 


A soft credit check does not impact your credit score. In simple terms, it means that a lender views your credit history, but your credit record doesn’t reflect that it’s been viewed. 

Soft inquiries are only visible on consumer disclosures— when you request a copy of your credit record. 


Why Would Lenders Use a Soft Credit Check?


Usually, lenders use soft credit checks to verify your eligibility for one of their financial products and what rates to offer you. They check your credit record because this shows them how you behave as a borrower.

If you are a reliable and credible borrower with a borrowing history to show that, they may offer you better rates. If you need help in knowing the best ways to repay your debts, read our helpful guide here.

You may also have employers want to perform a soft credit check when reviewing your job application. This will ultimately depend on the employer.


credit score scale

How much you can borrow will depend upon your financial situation, such as your credit score.


When Would a Soft Credit Check Be Used?


The following checks are all examples of soft credit searches:

  • Personal credit checks;
  • Pre-approved credit offers;
  • Insurance applications;
  • Account reviews by current creditors.


 What is a Hard Credit Check?


If you’ve applied for finance, whether it’s for a credit card, personal loan, mortgage or another form of lending, the lender will do a more thorough credit check – a hard credit check. This will, unlike a soft check, be recorded on your credit file. It could lower your scores by a few points, but won’t have any dramatic impact.

While a single hard search is unlikely to play a huge role in whether you’re approved for a new card or loan, having too many in a short period will work against you when trying to secure finance. Most hard searches stay on your credit report for 12 months.



How Many Points Does A Hard Credit Search Cost?


According to FICO, one will usually lower a credit score by less than five points. And over time, the impact on your score should be less until it no longer counts at all, about 12 months after it’s carried out.


Why Might a Lender Conduct a Hard Credit Check?


A hard credit check will often be done after a soft credit check, once you commit to a financial product, when you agree to buy the product. Some creditors automatically conduct a hard credit check at the point of application, so please do your research before applying. Some lenders do offer no credit check loans

Hard credit checks tend to be used for loan, credit card or mortgage applications, when you open a new utility account or when you pay-monthly for a mobile phone contract.

The following checks are all examples of hard credit searches:

  • Loan applications (mortgage, auto, student, personal, etc…);
  • Credit card applications;
  • Requests for credit limit increases;
  • Applications for lines of credit;
  • New utility applications;
  • Apartment rental applications.


How To Boost Your Credit Score 


There are a number of ways to improve your credit score, inlcuding:

Check Your Credit Report For Errors

Roughly one quarter of Americans have an error on their credit reports, such as fraudulent or duplicated accounts, as well as misreported payments. Your score may increase if you are able to dispute them and have them removed.


Increase Your Credit Limit

Another way to increase your credit score is by increasing your credit limit. Each credit card company will have a different process but it’s typically very easy and very quick, either by applying online or calling them. 

By increasing your credit limit, you lower your utilization and thus increase your credit score, showing that you don’t max out your credit. 


Pay Credit Card Bills

If you have several cards with a balance, focus on the highest card balance to reduce your credit utilization ratio.

Paying down your outstanding debt can also improve your debt-to-income ratio, which is used by many lenders.