Understanding Soft And Hard Credit Checks When Applying For A Mortgage

1st September 2017

There are two types of credit check: soft checks and hard checks. It’s important to understand the difference between both, as too many hard credit checks can damage your credit rating. A soft credit check, however, doesn’t leave a mark on your credit report.

Credit Checks

When a lender looks at your credit history to see your borrowing and credit habits, this is known as a credit check, or credit search.

Credit checks show lenders your past credit history, helping them decide whether or not they’re prepared to lend to you.

Credit checks aren’t an exclusive part of applying for a mortgage. Potential landlords, employers, or lenders for other types of loan may run a credit check to find out more about your financial situation.

The difference between your credit score and credit report

Although they’re closely linked, your credit score and credit report are two different things. Your credit score is an indication of your credit report, giving lenders an idea of how well you manage credit.

Your credit report is a breakdown of your credit history. It shows lenders details of any loan agreements and any missed or late payments, giving a clearer picture of your financial situation and helps them decide whether you’d be a trustworthy borrower.

Lenders need more detail than just your credit score can provide before deciding whether to lend to you. They’ll always look at your credit report, usually running an initial soft check followed by a hard check once your application is submitted.

A soft credit check is a preliminary search that show lenders some, but not all, of your credit report information. A soft credit check doesn’t go into as much detail as a hard credit check.

Soft credit checks don’t have an impact on your credit rating regardless of how many you have. Checking your own credit report is a form of soft credit check, and you can check it as many times as you like without worrying about damaging your credit score.

A hard credit check involves the lender taking a full look at your credit report. Unlike a soft credit check, a hard credit check leaves a mark on your credit report so can have an impact on your credit rating.

A hard credit check is unavoidable when you’re applying for a mortgage, but lenders can’t run a hard credit check without your permission. You’ll only ever be hard credit checked once you’ve applied for credit.

Most hard credit checks stay on your credit report for 12 months. Numerous applications for credit in a short space of time are more likely to have an impact on your credit score, as it implies to lenders that you suddenly need credit as you’re struggling financially. This isn’t an attractive quality in a potential borrower, which is why finding a competitive mortgage deal with a lower credit score is more tricky.

When to expect a credit check

Each lender has a different process when it comes to running credit checks. However, some will carry out a soft credit check before issuing you with a Decision in Principle. A soft credit check gives lenders a rough idea of whether they’re prepared to lend to you, but this won’t be confirmed until they’ve run a hard credit check once your full application has been submitted.

More lenders are now going straight to running a hard credit check when issuing you with a Decision in Principle. If they run a hard credit check at this stage, they won’t run another one once your application has been submitted - only one hard credit check is necessary in your mortgage application.

However, if there’s a significant amount of time between receiving your Decision in Principle from the lender and submitting your application, the lender may decide to run another hard credit check. They’ll only do this with your permission.

Does Trussle run a credit check?

To better understand deals you may be eligible for, we’ll run a soft credit check before we provide you with a Mortgage in Principle. This won’t leave a footprint on your credit file and won’t impact your credit score in any way.

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