Why credit searches are important

Credit searches are important. Each time you apply for a loan a lender will search your credit report. As a result your credit score may fall.

A seach ‘footprint’ is left behind when creditors undertake this ‘credit check’. As a result, other lenders can see these footprints. They then know that you have been looking for credit. If there are lots of footprints they know you have been making a lot of applications. Because of this a lender may decline your credit application.

One or two searches per year are unlikely to make much difference to your ability to get a loan. But several in quick succession means your application could be rejected.

If a lender therefore sees that you’ve made, for example, five searches over the last two months – they might conclude that you’re getting desperate for credit or that you’re struggling with your debts. Consequently, you might be declined.

Searches remain on your credit file for up to two years. A search at one Credit Reference Agency (e.g. TransUnion) will not show at another (e.g. Experian).

Soft vs hard checks

Sometimgs when you apply for a quotation or to see if you qualify for a loan, this is a soft searches. Also known as ‘soft checks’ or ‘quotation searches’, they only leave a ‘footprint’ on your credit file that’s visible to you.  Soft searches are also created when you:

  • Look at your own file
  • Need to prove your identity and the provider uses Credit Reference Agency information to do this
  • Obtain a quote for services, including insurance

Hard searches, on the other hand, are full credit checks. In these cases, lenders look at all the information held about you. This determines whether you’ll be accepted for a loan or other service (like a mobile phone).

How it works at Bradford District Credit Union

The Credit Union always performs a hard search when you apply for credit. This keeps our costs down because ‘soft searches’ are an additional cost on top of the hard search we are legally obliged to undertake when you apply for credit. We pass these savings onto our members in the form of lower interest rates for loans.

If you have a recent default, County Court Judgment or are currently insolvent, do not apply for a loan as your application will be rejected. Because we carry out a hard check this could lower your credit score. Please read our money tips to see what you can do to improve the liklihood of being accepted for a loan.

Also, we use a software company to access your data on our behalf. They do not see your information but provide us your credit report in a way that enables us to assess your application more quickly. This company is called NestEgg and you can read more about this in our privacy policy.