Car finance - Soft searches

If you’re looking for finance, you will have heard olr seen the words ‘soft search’. But what does that mean, and will it affect your credit rating? Find out in our blog post below.

When a finance company is considering your application, they will need to carry out a background check. If they went through a full credit check each time, this would show on your credit report. If you apply for finance with several lenders, you would have multiple searches on your credit report, alerting lenders that you are looking for finance and therefore positioning you as a potential risk.  

A hard search shows up on your records and you could in fact be penalised for trying to find the best finance and credit deal. This is where a soft search can be useful.

A soft search is a handy way to find out your eligibility for finance. It doesn’t show up on your credit report and won’t affect your credit rating. During the comparison stage, this is the best type of search to look for to ensure you get the best deal and that the searches don’t show up on your report.

Sometimes called a quotation search, a soft search allows lenders to view your profile and assess your situation in order to quote you on your finance package. Once you have selected a lender and a deal, a hard search will then be made to make things official.  

With hard searches, it is recommended that you do not have more than 3 to 4 conducted over the course of a one-year period. You should also spread these out as best you can to avoid worsening your credit rating.

If you’re looking for car finance in Derby or need some advice, get in touch with the team at Hilton Garage.