When has something soft ever been a good thing? So you’re probably reading this because you decided you're going to put your grown-up bootcut jeans on, watch the breakfast news and take a quick look at your credit report.
You tried to concentrate, but only ended up falling asleep halfway through, with your phone in your hand, woken up by a Hinge match and thought…what is this credit search crap?
What is This Credit Search Jazz?
You’ll probably already know this, but your credit report is pretty much the adult version of your Year 9 school report written by Mr “My Breath Always Stinks of Coffee and My Wife Left Me Cigarettes”.
Your credit report is a record of how you use your money, if you ever want to borrow money, it helps lenders decide whether they want to give it to you or not.
Lenders ultimately use it to decide whether you’re likely to pay them back if they lend you money.
Every time a business checks your credit report they leave a little record of their search. Their search will either be a soft credit search or a hard credit search.
So What is a Soft Credit Search…?
Soft credit searches are usually used by companies to see if you are eligible for any of their credit offers.
Soft searches use limited information to make a quick decision, saving you the mind-numbing task of filling in long application forms.
Soft credit searches don’t impact your credit score and won’t show on your credit report if another lender tries to take a cheeky look.
Who Makes Soft Credit Search?
A few examples of soft credit searches:
- Personal credit checks - To check your eligibility for credit offers
- Pre-approved credit offers - To pre-approve you for loan and credit cards
- Insurance applications - To verify your identity & assess risk
- Account reviews by current creditors - to see if you are eligible for any new offers or if your financial circumstances have changed
- Employment applications - Employers use this to double check your identity and your financial standing.
What’s a Hard Credit Search?
A hard search pops onto your account every time you apply for credit.
It acts as a permanent record and it's like a 2am Tinder swipe, you just can’t take it back, even though you might (or might not) want to, sometimes that booty call life is necessary.
There is always a chance that a hard credit score can lower your credit score, but hey does that really matter if you get the credit you need…probably not.
The following types of credit checks are examples of hard inquiries.
- 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
- Collection agency skip tracing