Hard credit search

Definition

A hard credit search is when a finance provider takes a look at your credit file to check your eligibility. In a hard credit search, this interaction is recorded on your credit file, so other finance providers can see that you have been checked before.

What does it mean to you?

When a finance provider looks at your credit file, they are assessing how much of a risk you are as a customer. If you have an excellent or good credit rating, then you are less of a risk and so more products and better interest rates will be available to you. If you have a fair, poor or bad credit rating, you will have less options available and the interest rates will be much higher.

Each finance provider has their own criteria they follow when conducting their credit check. They may use a credit check agency to calculate your score, or conduct the check themselves. They will be analysing a number of different factors to assess your quality as a potential customer.

Hard credit searches can become a problem for you if multiple are recorded on your credit file. It’s a sign that you have been applying for a finance product many times, and could signify you are ‘desperate for credit’. In that case, it could raise a few red flags that would put off a provider from giving you the best deal.

What is meant by being ‘desperate for credit’?

Being seen as being ‘desperate for credit’ means that the finance provider thinks you are trying too hard or too often to get a finance agreement. It could mean that there are hidden issues that aren’t recorded on your credit file that make you more of a risk as a customer. It could also show that you are being less careful with your finance applications, and are just seeking whatever provider will lend to you.

Should I go ahead with a hard credit search?

If you know your credit rating and have definitely found the finance provider you want to use, then you may want to go ahead with a hard credit search. If you feel confident you won’t be refused and don’t want to shop around, then having a successful credit check on your file will not be a problem going forward. The issue is if you want to shop around at several providers to see what options you have available. The multiple credit checks will start to stack up on your file, potentially becoming an issue with you being approved or getting a good finance deal.

What are the advantages of a soft credit search?

The opposite of a hare credit search is a soft credit search. In a soft credit search, you will have your credit file analysed by the finance provider, but it won’t be recorded on your file. That means you can find out what sort of deal the provider will offer you, and can decide whether or not to accept, without having that pressure of the application being recorded. This allows you to shop around more and find the best deal for your financial circumstances.