Credit Score Basics > How does a soft credit check work?

How does a soft credit check work?

Wollit Team3 minute read · Updated 28th July 2024

In the UK, a soft credit check is one that happens when you check your own credit score or when you simply check your eligibility for a product. Here is how it works.

What is a soft credit check?

A soft credit check, also known as a soft search, is a review of your credit report that does not affect your credit score. In fact, soft checks do not affect your credit score, regardless of how many times they are conducted.

Soft credit checks happen in three situations:

When you use an eligibility tool to check if you qualify for a loan or other financial product.
When you check your own credit report and score.
And when a lender verifies your identity.

What do soft credit checks show?

The answer to this depends on who runs the credit check.

When you view your own credit report, you’ll be able to see everything, just as a lender would during a full loan application.

However, when a lender or company performs a soft credit check, they can only access basic information from your credit report, such as credit score, address history, records of bankruptcies and defaults, and basic credit utilisation and history.

This information helps lenders gauge your reliability as a borrower without going into the detailed history required for a hard credit check.

What is the difference between a soft credit check and a hard credit check?

The main difference between these two kinds of credit checks lies in three things: what they’re used for, who can see them, and their impact on your credit score.

Here are these differences:

Purpose: soft credit checks are only used for assessing eligibility or pre-approval. Hard credit checks are used when you actually apply for credit, such as loans, credit cards, or mortgages.
Visibility: soft credit checks are not visible to other lenders; only you can see them. Hard credit checks are visible to other lenders, and will stay on your credit report for up to two years.
Impact on credit score: soft checks have no impact, regardless of frequency. However, each hard check can lower your score, particularly if multiple checks occur in a short period.

Can I fail a soft credit check?

No, you cannot fail a soft credit check. Since it is not a formal application for credit, it does not result in a lender's decision. Instead, it just gives you an indication of your likelihood of being approved for credit based on your current financial situation. That’s it.

How can I check my own credit report?

You can check your own credit report through various credit reference agencies in the UK, such as Experian, Equifax, or TransUnion. This process is considered a soft credit check and will not affect your credit score.

How many soft credit checks can I have?

There is no limit to the number of soft credit checks you can have. You can check your credit report as often as you like without worrying about your credit score.

Why are soft credit checks useful?

Soft credit checks are great because of a few things:

They allow you to check your eligibility without affecting your credit score. This is the most important advantage, as it can help you make informed decisions about applying for loans or credit cards.
Soft credit checks are also useful because they let you regularly check your credit report for accuracy so you can spot and fix errors, including potential signs of identity fraud.
Finally, since soft checks do not involve a formal application, you cannot "fail" a soft credit check. This means you can explore your options without the risk of hurting your credit rating.

However, this doesn’t mean that if you pass a soft credit check your loan application will automatically get approved. This is why it’s so important to work on your credit history, the main factor that influences your credit score and lenders’ approval decisions.

One of the ways to do this is to download a credit-building app like Wollit.

Wollit works by reporting a fixed fee monthly subscription as a loan repayment to the credit reference agencies (Experian, Equifax, and TransUnion). This helps you build or rebuild your credit history by showing that you can pay debt on time. It can even report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills when they’re due. In time, this will help you improve your credit score so you won’t need to be worried about any credit check ever again.