Do hard credit checks negatively affect me and my credit score?

By Natasha Culzac
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Too many 'hard' credit checks in a short space of time can be bad news for your credit score - find out why.

When you apply for a credit card or a mobile phone contract, your financial history is laid bare. Companies want to delve into your monetary past to predict the future they’ll have with you. This is what a credit check is all about and they come in soft and hard varieties.

Well, just how hard is hard?

If a credit check was Grant Mitchell, it would swing somewhere between a brief sussing you out in the Queen Vic, up to a clip round the ear. One clip round the ear is nothing, but a regular clipping round the ear would probably hurt a bit.

Let me explain...

If you applied for a personal loan, the lender would want to know what your financial backstory is. They’d ask a credit reporting company to do the legwork and get back to them about your situation. This is a hard credit check and they can only do this check with your approval.

Credit reference guys look at a range of things such as whether you’ve missed bill payments (and how often), how much debt you currently have and its age, and even, you might think bizarrely, whether you’re registered to vote - as apparently those who are on the electoral register are statistically better with their finances. All of these records go back six years.

There a bunch of different agencies, including Experian, ClearScore and Callcredit. They are competitors and they do things slightly different from one another. They might even vary in the information they hold for you. They don’t take into account your savings, or your sex, ethnicity, marital status or religion.

Leaving its mark

Every hard credit check has a footprint and is recorded on your file for a year, but only sometimes can that be a bad thing.

When can it be bad?

When you’ve had a number of hard credit checks in a short space of time, it could indicate to a lender that you’re under some financial stress and, sadly, a bit desperate. One or two hard credit checks should be fine, but multiple ones around the same time will raise eyebrows and could affect whether you’re approved for the product you want - hence the clipping round the ear analogy, geddit?

But generally they’re ok?

Yeah, they’re not the end of the world. And as mentioned previously, they only stay on your record for a year and then they disappear.

What if I want to check my own credit report?

You can and thankfully that’s not a hard credit check - that’s a ‘soft’ one, which means it’s not recorded and won’t affect your score. You can pay companies like Equifax, Experian or CallCredit to check your report, or there are a number of free ones on the market.


See our article ‘Hard v soft credit checks’ to learn more about the differences.

Top Things to be aware of

- Experian advises that you don’t apply for any credit in the six months before you try to get a mortgage – providers don’t want to think that you’re paying off a loan with a mortgage!

- If you’re planning on applying for credit, take a look at your report first and give yourself time to sort out any discrepancies.

Top Takeaway

One hard credit check here or there won’t cause you too many problems. It’s when you have a burst of them that it matters - because this is usually associated with financial distress and lenders are less likely to lend to you if they see that you’ve been desperately applying for credit. Try to space them out a bit or else find quotations that use soft searches as a way of shopping around.

 

By Natasha Culzac

Thanks to a journalistic career history and a childhood at Sylvia Young Theatre School, Natasha has her fingers in a few professional pies, doing her best impression of a model and actor as well as personal finance writer. Outside of work she compulsively watches BBC period dramas and constantly lies to herself that this year will be the year she learns French, once and for all.

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