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What is a credit search?

When you apply for a credit product, to decide if the product is suitable for you and if you are eligible, a ‘credit search’ or ‘credit check’ is run to verify your personal details. You will probably have seen these mentioned when you’ve purchased a new mobile phone contract, when you have opened a bank account, or when you’ve used Klarna.

A credit search is where the lender (or comparison site), provides your personal details to one (or more) of the CRAs, and the CRA returns the information that has been matched to you. The information will include the credit score they have created for you, alongside the credit and public information that is on your file.

There are two types of credit searches that you might experience, a ‘soft credit search’ or a ‘hard (full) credit search’. Both types of searches return the same information from the credit agencies to the lender. So what’s the difference?

  • Soft credit search – A soft credit search is used as part of an eligibility check. This search is not recorded on your credit file and therefore does not impact your credit score and it is not visible to other lenders. Whilst other lenders cannot see that a lender has run this soft credit check, you will be able to see this on your own file (so don’t worry, this is normal). Currently, this is used for when a customer applies for a Pay Later or Pay in 3 product
  • Hard (or full) credit search – A hard credit search is completed when you proceed with a full credit application for regulated credit products, like a long term financing agreement or higher value loan such as a mortgage. This search is recorded by the CRA and can be seen on your credit file. It may therefore impact your credit score and is also visible to other lenders. Too many hard credit searches in a short period of time can have a negative impact on your credit score because it may indicate that a consumer might be credit hungry and risks overborrowing. This is applied when a customer applies for a long term Financing product

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