The Best Way To Do A Soft Search On Your Credit Scores

Soft Search On Your Credit Scores

Your credit score has a great influence on your financial health. Depending on your credit history, a lot of different financial decisions might be influenced for you. From getting a mortgage to getting your dream house on rent, the credit rating comes in handy at every step.

How Is My Credit Score Calculated?

This significant bit of financial information is calculated using four major criteria. Four major credit rating agencies in the UK provide scores to every individual holding a credit card or with a loan. These are Experian, TransUnion and Equifax. 

There are also several smaller credit rating agencies which might keep track of your scores. They are collectively referred to as the Fourth Bureau. All of them use the following four criteria –

Credit Card Utilisation Rate

This forms a major part of the score and refers to the extent to which you use your credit cards. The higher the usage rate, the better your credit score.

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On-Time Payments

When you pay your loan EMI or your credit card balance, plays a significant role in your credit score. Paying up the whole of your monthly bill or EMI within your deadline ensures that you have a higher score. If you pay the minimum amount, that might lead to you accruing higher interest on your credit card bills.

Length Of Credit History

The age of your oldest credit card or loan that is still active is considered as the length of your credit history. The older your history, the better your credit score.

Derogatory Marks On Your Credit Reports

This is indicated by the number of hard searches on your credit report and harms your credit score.

Two Types Of Credit Searches

When a bank, landlord’s association or you yourself check your credit score, it is called a ‘pull’ or ‘pulling your credit’. There are primarily two types of credit checks – a hard pull or a soft pull.

Hard Pull Or Hard Inquiry

A hard pull or hard inquiry is generally requested by a bank or other financial institution to check your credit score. It is usually asked for when you apply for some kind of financial assistance such as a mortgage, credit card, student loan, auto loan, personal loan or business loan.

Conducting a hard inquiry of your credit score requires your consent, and hence, you must be given them written approval for performing the same. A hard pull is going to affect your credit score negatively.

It will also be reflected on all your future hard, and soft inquiries and therefore will be visible to everyone who pulls your report. However, some credit rating agencies allow a window in which all hard inquiries are considered to be one. This is exceptionally helpful when you are applying for multiple loans to find the best interest rate, such as for a student loan.

You have to be careful, however, to not run too many hard pulls on your credit score as they have a significant impact on your credit score. With an outstanding credit rating, you can still afford a couple of hard pulls. But if your rating is on the borderline, you should probably really think about it before you go ahead with an approval to run a hard pull.

Soft Pull Or Soft Inquiry

A soft credit check is done without your knowledge most of the time. It is mostly for informational or promotional purposes and is done by credit card companies when they reach out to you with offers and new credit card proposals.

Many times, these soft search loans are pre-approved and come in from lenders and mortgage brokers. Your potential employer is also likely to run credit checks on you before offering you a job. A person with a good credit history may inspire confidence for an employer, and hence, it is a typical process.

Finally, you yourself can do a soft search on your credit score. This is a great move to stay abreast of your financial health, especially if you are looking to invest in property, apply for a student loan or are in general worried about how it looks.

The most important part of a soft credit check is that it does not have any impact on your overall credit score. It may remain on your credit reports for up to two years to give a broader idea of all the financial institutions that may have looked up your score.

Why Should You Do A Soft Credit Search?

Soft credit checks barely come with any disadvantages. In fact, there are a host of benefits that are attached to a soft credit check.

  • You can get better credit card offers with a good soft search on your credit score. Credit card companies are more likely to come through with better rewards and point systems on your card if you have a higher score.
  • You can get pre-approved personal and home loans for a longer period. When lenders and mortgage brokers see a high score, they have more faith in offering you with better interest rates, longer tenure and more loan amount.
  • You can snag that beautiful apartment before others with a great soft credit score. When you approach a rental application with a soft credit report attached, landlords are more likely to consider you over other applicants.
  • And finally, keeping tabs on your credit score can help you maintain it or increase it by undertaking good financial practices.

How Do I Do A Soft Search On My Credit Score?

This is very easy. The three top credit rating bureaus in the UK allow you to pull one free soft report every year. So, you can maximise on this facility and pull your own soft score and be prepared. You can also see the people who have checked your credit history in these reports.

Moreover, this can help you understand if you need to go for a payday loan for bad credit or if you are eligible for applying for proper loans through banks that run hard checks. If you have a bad credit rating, you can always get a membership with a financial aid organisation and better your score. 

Also Read: Reasons to Choose Professional Credit Repair Over Free Services