Looking for a business loan can seem overwhelming. Many lenders will conduct a hard credit check on your business during the application process, which is noted on your credit record. Too many applications can negatively affect your rating. However, you may get the answer you need via a soft credit search instead, which – as the name suggests – isn’t as thorough as a hard credit check and might still give you an indication of the amount you may be able to borrow. Below, we take a quick look at soft credit searches and what they might mean for you.
What is a soft credit search?
Also known as a soft credit check, a soft search is an initial look at your credit report. Companies use soft searches as a tool to see if your application for a loan may be successful, without needing to take a deep dive into your credit rating. Unlike hard credit checks, soft searches are only visible to you, meaning they won’t affect your credit score.
On the other hand, a hard credit check involves a complete search of your credit file when you apply for finance, or even when requesting services from utility providers (i.e. taking out a new mobile phone contract.) Each hard check is recorded, meaning any applications you make will be visible to lenders. Lenders check your credit report to assess risk and suitability. The lower the risk you pose, the more likely you are to get accepted.
What do soft searches show?
A soft credit check will reveal a snapshot of your financial history. It includes details like your name, address, and credit history. There’s a little more detail on what this means below:
- Personal details such as your name, address and date of birth
- Lenders may also be able to see details of your current credit accounts such as credit cards and loans.
- Information on any missed or late payments.
- The details of anyone you are financially linked with, for example via a joint account.
- Any relevant public records including Information on bankruptcies, County Court Judgements, and individual voluntary agreements.
Who uses soft credit searches?
Lenders use soft credit checks to see if you qualify for a financial product. You can also use soft credit checks to see what credit deals you’re likely to get.
Soft vs hard credit checks: what’s the difference?
The biggest differences between hard and soft credit checks are:
- Credit checks aren’t visible to companies, but hard credit checks are.
- Soft credit checks won’t impact your score (no matter how many of them there are) while each hard credit check may impact your score.
- A soft credit check occurs during identity checks, when you search your own credit report, or when you use a form of eligibility checker as a precursor to applying for a loan.
- A hard credit check usually occurs when you apply for a loan, credit card, utility company or phone contract.
So, what is the point of a soft credit check?
A soft credit check is a great way of seeing what credit you may be eligible for without impacting your credit report. It’s a great way to see what the financial landscape looks for you without actually having to complete a full finance application.
Use White Oak UK’s new soft search tool to check your eligibility
If you want to find out whether your business may be eligible for a loan, you can do so with our obligation-free soft search eligibility checker. This will give you an instant idea of what you may be able to borrow without affecting your credit score. Alternatively, you can get in touch with one of our friendly advisors by:
- Calling 01244 527300
- Emailing us at admin@whiteoakuk.com
- Getting support via our instant chat.
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