Nowadays, a lot more people are paying closer attention to their credit rating. Consumers are now a lot more aware of credit scoring, and we find that lots of first-time customers who get in touch, have already looked at their credit report online.
When speaking to customers, we often find that we get asked if we will be doing a credit search on them, as they know that too many searches can have a negative effect on their credit score. Lenders always run credit checks but we will ask the customer for their permission first, before doing so.
The purpose of a hard credit search is to analyse your credit report in-depth. Any financial institution carrying out a hard credit search should ask your permission to do so. The positive of being hard searched is that the lender is looking at your situation quite closely, so if you pass the credit score then there’s a high chance that your application will be successful.
If for some reason you cannot provide satisfactory documentation to backup the information you have disclosed or you have provided false details, then this might not be the case. Otherwise, it is likely.
The main negative about a hard search though is that it leaves a credit footprint. This means that any lender can see you have had a search carried out. Whilst at first this isn’t a bad thing, if you have several footprints registered in a short period of time, it could look like you’re applying for lots of credit at once.
The footprint does not provide a record of whether your application was successful or not, but lenders can often assume that if you you have had multiple, you must have also been declined for the previous one. Logically, why else would you be getting another one done?
The occasional hard footprint on your record isn’t too bad, so there’s no need to worry too much about this, especially if you know you have a good score. Just be wary about how many you have taken out.
A soft credit search is a much lighter approach to looking at your financial situation. This type of search are often carried out on price comparison websites to give you an idea of what products might be available to you. They can also be used to verify your identity.
Some mortgage lenders are now opting to use this type of search, as whilst it shows less information than a hard search, if you already have an Agreement in Principle alongside this, it can actually show the lender you’re in a much better position than others.
The good news is that these soft searches don’t leave a footprint on your credit file, meaning other banks and institutions can’t see that you have had one. You can then apply for an agreement in principle or for a mortgage, without it damaging your credit score, whether it is successful or not.
If you are in the market to make an offer on a potential new home, it is a good idea to have your mortgage Agreement in Principle in place prior to contacting the estate agent. By doing this, you’ll put yourself in the best possible position for obtaining a mortgage down the line. Having the Agreement in Principle can also at times put the agent off trying to “cross-sell” their own in-house mortgage services to you if you don’t want or need them.
You may be a First Time Buyer in Sheffield or you might be thinking of Moving Home in Sheffield and are seeking expert mortgage advice. If so, we think that you may benefit from our dedicated mortgage services and speaking to a mortgage advisor in Sheffield. Get in touch for a free initial mortgage consultation.
Date Last Edited: September 15, 2023