Soft vs hard credit checks – what’s the difference?

Purchasing a property, whether it’s your first or next home, can be an exhilarating yet tense time. After all the excitement of property viewings comes a period that’s a little less fun, with the pressure of completing the necessary paperwork taking its toll on even the most confident and financially stable buyer. There is however one stage in particular that has even more buyers on tenterhooks…

The dreaded mortgage credit check

The credit check is an important part of the purchase process when buying property with a mortgage. It gives the lender a clear picture of your financial history to date as well as the means to determine whether you are a good investment.

With UK mortgage payments increasing due to the cost of living – the average Brit is currently paying £1,293 per month – lenders have to be certain that you are reliable enough to make repayments.

Types of mortgage credit checks

Checks are generally categorised as ‘hard’ or ‘soft’ when applying for any form of credit. When applying for a mortgage both types of checks are used at various stages to ensure your financial history can be accurately examined.

The soft credit check

A soft credit check is just that. It is a process that’s used during the initial stages of the mortgage application – usually when obtaining an agreement in principle – and provides would-be lenders with a basic overview of your borrowing behaviour so they can determine how successful a full application might be.

The hard credit check

A hard search is much more thorough and will be performed when you apply for a full mortgage. Hard credit checks can be run more than once during the latter stages of your mortgage application, with final hard checks made during the exchange of contracts and even on completion day.

Hard credit checks provide a full financial history examination and leave a footprint on your credit file. Here Experian explains more about the impact soft and hard credit searches can have:

“There are two types of credit check – a soft credit check (or soft search) and hard credit check (or hard search)… Soft credit checks aren’t visible to companies, but hard credit checks are. That means that soft credit checks won’t impact your score (no matter how many of them there are), while each hard credit check may lower your score.”

Preparing for your closeup

While undergoing soft and hard credit searches during the mortgage application process cannot be avoided, there are several steps you can take to improve your credit score and boost your chances of success.

Make sure you are registered on the electoral roll, and make every effort to ensure regular payments are made on time. Low credit utilisation will also enhance your score for the better. You should check for inaccuracies too; view your credit file and amend any errors or mistakes before applying for a mortgage.

Just paid off a credit or store card to prepare for your property purchase? Keep the account open! Old accounts that have a long credit history can have a hugely positive impact on your score.

Get in touch with our advisors today

Here at The Mortgage Bureau, we’re here to support you as you move onto or up the property ladder.

Our team of independent mortgage advisors can provide guidance at every stage, including when preparing for a mortgage application, obtaining an agreement in principle ahead of your search or simply shopping around for a better deal. Find your local mortgage advisor to get started.