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A soft search is a credit file check that allows lenders to see a snapshot of your financial history without leaving a visible mark for other lenders to see. Unlike a hard search, a soft search does not impact your credit score, making it a safe way to check your eligibility for a loan or credit card.
What is a soft search?
A soft search, often called a soft credit check, is a way for a company to view a credit report without it affecting that specific credit score. This usually happens when you check your own credit score or when a lender wants to verify your eligibility for a financial product, such as a business credit card. Unlike hard searches, soft searches are not visible to other lenders. This means they do not impact your ability to borrow in the future.
The difference between a soft and hard credit search
Understanding the distinction between these two types of checks is vital for maintaining a healthy business credit profile. While both involve looking at your credit history, they serve different purposes and have different consequences for your score.
|
Feature |
Soft search |
Hard search |
|
Impact on credit score |
None |
May cause a temporary dip |
|
Visible to other lenders |
No |
Yes |
|
Common uses |
Eligibility checks, identity verification |
Final credit applications, mortgage offers |
|
Approval required |
Yes (implied or explicit) |
Explicit consent required |
What does a soft credit search show?
A soft search provides a high-level overview of your financial standing. It allows lenders to see enough information to make an initial assessment of your creditworthiness without accessing the deep level of historical data typically reserved for a hard search.
A soft search typically reveals the following information:
-
Your full name and current address.
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Confirmation that you are on the electoral roll.
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Public records, such as any County Court Judgments (CCJs) or insolvencies.
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A general overview of your current debt levels and repayment history.
Why soft searches are better for small businesses
When you are running a business, you might need to compare different financial products to find the best fit. If every comparison resulted in a hard search, your credit score could drop significantly in a short period, making it harder to access funding later.
Using a soft search to check your score allows you to:
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Shop around safely: Compare different business credit cards without damaging your credit profile.
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Protect your future borrowing: Keep your credit report clean for when you might need a larger loan or a mortgage.
How Capital on Tap uses credit searches
When you apply for a Capital on Tap Business Credit Card, we perform two distinct types of searches at the same time to provide an instant decision.
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A soft search on the individual: We check the personal credit file of the applicant (the director or majority shareholder). This check is a soft search, meaning it does not impact your personal credit score and other lenders cannot see it.
-
A hard search on the business: We perform a hard credit search on your commercial entity. This search is visible to other lenders and will appear on your business credit report.
The moment you submit your application, both the soft personal search and the hard business search are completed to determine your eligibility and assess you and your business for a credit limit up to £250,000.
Managing your credit file
Regularly checking your own credit report is a great habit for any business owner. These self-searches are also recorded as soft searches, meaning you can monitor your file as often as you like without any negative impact.
If you are looking to strengthen your financial position, you might find our guide on how to build business credit or our blog on using a business credit card effectively helpful.
The bottom line
A soft search is a powerful tool for small business owners, providing a sneak peek into your eligibility for credit without the risk of lowering your score. It ensures you can make informed financial decisions with confidence. Understanding the distinction between top-level soft checks and the more detailed hard searches is essential for any director looking to maintain a healthy and transparent credit profile while their business grows.
Frequently asked questions
What shows on a soft credit check?
A soft credit check shows your basic identity details, your presence on the electoral roll, and any public records like CCJs. It also gives a summary of your credit history to help lenders decide if you meet their basic criteria.
Can I fail a soft credit check?
Yes, you can be declined after a soft search if your credit profile does not meet the lender's specific requirements. However, because it is a soft search, the rejection itself will not be visible to other lenders and will not damage your credit score.
Do soft credit searches affect anything?
Soft credit searches do not affect your credit score or your ability to get credit in the future. They are only visible to you and the credit reference agency when you look at your own report; other lenders cannot see them.
How long does a soft search stay on a credit file?
Most soft searches remain visible on your private credit report for 12 months. After this period, they are automatically removed by the credit reference agencies.
What if I see a search on my credit report that wasn't me?
If you see a soft search from a company you don't recognise, it may be a background check for an insurance quote or an identity verification. If you see a hard search you didn't authorise, you should contact the credit reference agency immediately to investigate potential fraud.
Do businesses need permission to conduct a soft search on my credit file?
Yes, businesses must have a legitimate interest or your consent to perform a soft search. When you use an eligibility checker or a price comparison site, you are usually providing this consent in the terms and conditions.
This does not constitute financial advice. If you want to understand how credit searches impact your business in detail, you should speak to your financial advisor or accountant.
