What is a soft credit search and how does it help my credit score?

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If you’ve ever read our blog posts – or any other blogs on personal finance – then you’ve probably heard the term soft credit search cropping up here and there. On occasion, you might have wondered what on earth it meant. Other times, you might have got the gist of what it meant from the context, but if it was a question on Mastermind, you’d probably have to blag it.

We thought that might be the case – so we’ve written this quick guide on what a soft search, what it means and all of the other bits and pieces you should know about it.

First things first: what is a soft credit search?

In the simplest terms, a soft credit search is a quick credit check that doesn’t affect your credit score.

Going into a bit more depth, a soft credit search leaves a mark on your credit file – every check or enquiry about your finances does – but the important difference is that lenders can’t see these soft search marks. And, because they’re invisible, it means that lenders can’t use them to influence their decision either way.

Which is great – it means you can check your credit score as often as you like without it affecting your chances of being accepted for a loan, credit card or overdraft at all.

Why should I use a soft credit search?

According to This Is Money, The Daily Mail finance blog, applications to loans, credit cards or other forms of credit account for around 10% of your credit score. That means that the more applications you make to different forms of credit, the worse your credit score is.

On top of that, sending off lots of applications in a short space of time are a red flag for lenders – it tells them that you’re in a bit of financial hot water, or you’re anticipating being in trouble in the future. Neither of those options make you an attractive lending prospect.

As James Jones of Experian says:

‘Every application that is made leaves a footprint on your credit report. If you’re making a lot of applications in a short space of time then this can have a negative impact on your score.’

That’s where soft search comes in.

Most lenders and businesses that deal with lending – from high street banks to online lenders to comparison sites – now allow you to perform an eligibility check that does a soft search of your credit file to see if you’re eligible for products (or what products you might be eligible for).

How should I use soft search?

Firstly, it’s a good idea to use soft search to keep yourself clued up and aware of your credit score. Your credit score can fluctuate depending on things that happen during the month – you use your credit card, pay off some debt or move, for example – so it’s good to always keep an eye on it. You can sign up to ClearScore – they send you monthly emails that lets you know your credit score, what you’ve done to affect it that month and some advice on how to improve it. This service uses a soft search to check your credit file without leaving a trace.

Secondly, if you’re considering applying for any form of credit, you can use a comparison site – perhaps MoneySuperMarket or GoCompare – to see what products you’re eligible for. Not only do these sites prevent hours and hours of market research and trying to find products that cater to your needs, but they also massively reduce the chance of applying for a loan and getting rejected, which can affect your credit score.

Thirdly, once you’ve narrowed it down to the products that the comparison site thinks you’re eligible for, make sure to use the soft search to make sure you’re eligible for it before you apply.

For example, here at Bamboo we offer a personalised quote tool that uses soft search to see whether you’re eligible for one of our products before you apply – that way, if we’re not the right lender for you, you’ll know before you apply for the loan.

Even better, if you are the right customer for us – you won’t have to have that horrible dread when you hit the apply button: you already know you’re likely to be accepted, subject to some final checks.

If you’d like to use a soft search to find out how much you’re eligible to borrow from Bamboo, why not get a personalised quote? And, as you now know, it won’t affect your credit score in any way. (Representative 49.7% APR.) A guarantor may be required.

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