Four in 10 (43%) people are at risk of harming their credit score by confusing soft and hard credit searches, Capital One UK has found.

A hard credit search involves checking an individual’s credit record, leaving a mark for at least 12 months that other lenders can see on their credit file, which could affect their credit score and eligibility.

A soft credit check is an initial look at certain information on a consumer’s credit report, which will reveal their credit eligibility or likelihood of acceptance prior to a formal application, crucially meaning that it has no impact on their credit score or ability to obtain credit in the future.

Capital One’s research shows that awareness between these searches has fallen over the past four years, with one in six (17%) saying that they did not know that a search carried out during an application for credit could leave a visible footprint on their credit file, up from 11% in 2019.

The survey also found that 14 million people, which totals 26% of the population, have never checked their credit score, with a further three million not knowing if they had. The most common reason for checking a credit score was applying for a credit card (19%), which is up
6% in the past four years.

This is followed by people being denied credit (17%), applying for a mortgage (16%) and applying for a loan (15%).

Senior director of marketing and partnerships at Capital One UK, John Birkbeck, said: “Our research shows that it’s clear more needs to be done to help consumers understand their credit scores and start to reverse some of the declines we’re seeing in awareness.

“It’s important that consumers are aware of the impact a hard search can have on their credit score, potentially making access to credit more difficult in the long run. Too many hard inquiries in a short time can give the impression that consumers are seeking loans and credit cards that they may not be able to pay back.

“As interest rates continue to climb, a healthy credit record is more important than ever. This is especially true, for example, for those coming to the end of their mortgage deal, or who want to get on the property ladder for the first time, as we’re seeing lenders holding applicants to much tougher criteria for mortgage offers.”

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