Car finance: what is a soft search?

Companies check your credit history before lending you money but not all checks are the same: hard ones leave a trace, while soft ones don't

John Evans
Sep 16, 2021

We all know that there are a number of things in life that can be had in either hard or soft form, but perhaps what you didn’t know is that these terms are what the finance industry uses to refer to two types of credit searches when a company or even a future employer looks at your credit history.

Companies do this to discover more about your financial dealings and relevant information about you. You can even conduct a search of your own credit history.

It all sounds perfectly reasonable, except that these two types of searches are very different and can have very different consequences. If you value your credit worthiness, it pays to know what they are.

So keep reading to find out more and click on the link to find out how to check whether your credit score is good enough to get car finance.

What is my credit history?

If you have ever borrowed money, taken out a mortgage, a phone contract, a credit card, gone overdrawn, had a county court judgement awarded against you or are associated with people who have a poor financial record, it’ll all be recorded on your credit report.

This is how companies gauge whether they're likely to get their money back if they lend to you. Therefore, for the best chance of being approved for finance, you'll want to make sure your credit history is as strong as possible. Your history is compiled by four major credit reference agencies: Equifax, Experian, TransUnion and Crediva.

Who would want to search my credit report?

Your credit report is what lenders consult when deciding whether to lend you money, and if so, how much to give you and at what rate of interest. They may also check it to see if you qualify for any special finance rates, deals or credit cards.

Even a future employer who just wants to know a little more about you may want to check your credit record. You can also check it yourself, should you wish to.

Checking your own credit report will allow you to know exactly what it says, to see if there are any errors in it (any that you find must be corrected by the reference agency concerned) or to understand what kind of credit risk you're viewed as and how this may affect your ability to borrow money.

It’s free to check your credit history with each agency but there are also third-party companies which, for a monthly subscription, will check all four for you.

So is there any risk in having many searches carried out? This depends on what type of searches you're talking about. Soft search won't be a problem, but having too many hard searches could make borrowing money much more difficult, if not impossible. Keep reading to find out why.

What is a hard search?

A hard search occurs when you apply to borrow money and the lender checks your credit history to make sure you have a good financial record, and that you can afford the loan and won't miss payments.

It’s a formal, in-depth search that is recorded on your credit history. Bear this in mind because if you were making the application simply to find out whether you might be approved for a loan, a lender or anyone else checking your history will see your enquiry as a formal application.

That’s fine if you can afford the loan and are accepted, but make another application and other lenders will think you’re overstretching or struggling with your finances. The credit reference agency will reduce your credit rating for up to 12 months, making it difficult for you to borrow money.

Compounding your difficulties will be the fact that the results of your application, or applications, will be recorded for other lenders or interested parties to see. This is where soft searches come in.

What is a soft credit search?

Unlike a hard search, this type of search is not as in-depth or as formal. As a result, though it is still noted on your credit history, it cannot be seen by other lenders and will not affect your credit score. A company might do it to find out if you’re eligible for certain deals, rates or offers.

If you are eligible, you may be granted pre-approval for a loan, meaning you know where you stand and can then set about choosing a car, for example, that fits your budget.

When you check your own credit history, perhaps to find errors in it, this, too, is recorded as a soft search.

When can a car finance soft search be seen?

Insurance companies may be able to see searches made by other insurers, and if you grant a debt settlement company access to your report, it may share its enquiries with companies you owe money to.

However, whether it can be seen or not, the fact remains that you can make any number of soft searches without affecting your credit history or creditworthiness. This means that when shopping around for the best deal, you want to make sure that only soft searches are being carried out every time you get a quote.

Car finance soft search: is it safe?

It is but you can be even safer by initially using online calculators - like the BuyaCar car finance calculator - to establish how much monthly payments are likely to be. Do this to find the best car for your budget and you can then find a specific quote on the car you choose.

Also, protect yourself by checking that the credit search a company is making is soft and not hard. Letting them know you know the difference between these two types of search will certainly get their attention.

How can I protect my credit score?

When researching loan costs and affordability, use online loan calculators (remember that your specific credit rating will affect factors including how much you can borrow and the interest rate you're charged) rather than making formal loan applications that will count as multiple hard searches.

If you must make multiple loan applications, space them out at the rate of one every three months to reduce their impact on your credit score. This means planning ahead of when you need to borrow money to avoid numerous hard searches in a short space of time.

Check that your credit history contains no errors and, in particular, hard searches carried out by fraudsters. If you find any, have them deleted by the relevant credit rating agency.

Make sure your finances are in good shape by paying off debts, including credit card debt, and by paying bills on time. Also make sure that you’re on the electoral roll - meaning you're registered to vote - as this improves your chance of getting credit. This work will trickle down to your credit history in time and your rating should improve.

How can I boost my chances of getting a loan?


In addition to tidying up your finances which, in time, will improve your credit rating, consider borrowing a smaller amount of money, either by putting down a larger deposit or buying a cheaper car. Note that a lender is unlikely to approve a loan where you have to pay back more than 25% of your net salary each month.

Remember that a lender can see your credit file so do not be over-ambitious or ignorant about your financial affairs, including income and expenses, the value of outstanding loans and monthly repayments, and the presence of any county court judgements against you.


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