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Hard and Soft Credit Searches in Leeds

What is a Soft Credit Search for a Mortgage?

The general public is now paying more attention to their credit rating than ever before. Consumer awareness of credit scoring appears to be higher than ever before and a large majority of people who get in touch with our team appear to have already reviewed their credit report online.

There are numerous credit reference agencies to choose from, but the two most common companies as Experian or Equifax but we recommend to new clients to use Check My File for a 30-day free trial, following this it comes to £14.99 a month but can be canceled any time. This report offers our clients a collation of information produced in an easy to understandable colour-coded report.

Often clients ask if our Mortgage Advisors will be doing a credit search on them because they are aware that too many searches can have an adverse effect on their credit score. The lender always runs credit checks but our Mortgage Advisors will seek out the client’s permission before doing these.

Credit searches from banks come in two forms; hard searches and soft ones.

What is a Hard credit search?

A hard credit search is an in-depth look at your credit report and any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search would be that because the lender is looking into your situation quite closely, if you pass the credit score then it’s likely that your application will ultimately be successful. The only thing that can really go wrong from then on is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed, or it turns out you have provided false details.

On the other hand, one of the benefits is that the hard search leaves a ‘footprint’ on your credit file so that anyone who looks at your report can see that it has been carried out. This isn’t a bad thing but for example, you have multiple searches included in your credit file in a short period of time then it could be perceived as you are applying for a vast amount of credit at the same time. The footprint does not state whether your application was successful or not but if you have several searches over a few weeks then Lenders’ systems could wrongly assume you are being declined on the basis that “Why else would you go to Lender number 2 unless Lender number 1 had said no?”.

The odd hard footprint on your record is no big deal so this doesn’t give reason to worry too much about it; just take precaution in having too many.

What is a Soft credit search?

The other form – a soft credit search – is a ‘lighter’ search which looks at your financial situation and would be the type of search that would be carried out on price comparison websites to let you know what may be available to you, or it could be used to verify your identity. Some Mortgage Lenders carry out soft searches and nowadays, even more Lenders seem to be changing to this type of search. Whilst less information is offered to who is carrying out a soft search on you as opposed to what they would receive if it was a Hard search, if you obtain an Agreement in Principle from one of these Lenders, it’s usually still an extremely strong indication that your full application will be accepted.  

One of the most beneficial things about soft searches is that whilst you will be able to see soft searches that have been carried out on you if you check your credit file (people are usually surprised by how many have been carried out on them) these searches are not visible to other Financial institutions like Banks. This means you can apply for an Agreement in Principle for a mortgage without it damaging your credit score irrespective of whether it is successful or not.

If you are thinking of making an offer on a property, our Mortgage Advisors in Leeds would recommend having a mortgage agreement in principle in place prior to contacting the Estate Agent. You want to be able to give yourself the best possible chance of securing the property you want at the lowest possible price so if you present yourselves as having your finances in a good place then you are definitely giving yourself the upper hand in the situation. Being in possession of an Agreement in Principle could also mean that the Agent is put off trying to ‘cross-sell’ their own in-house mortgage services to you.

Leedsmoneyman.com & Leedsmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

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