How long do hard searches stay on your credit file?

Hard credit checks remain on your credit file for a year and can be visible for up to two years in the UK. However, their impact on your credit score diminishes over time. Initially, these checks may slightly lower your score, but as months pass, their effect lessens, especially if you maintain good financial habits.

However, there’s more to know about hard searches than how long they’re visible. So, in this article, we’ll break down what a hard search is, why it impacts your credit score, and what you can do to minimise that impact. Let's jump right in!

What is a hard credit check?

A hard credit check, also known as a hard inquiry or hard search, occurs when a lender reviews your credit file as part of the loan approval process. This happens when you apply for a credit card, a mortgage, or personal loan. Unlike soft checks, which don't affect your score, hard checks are recorded on your credit file.

Understanding the impact of a hard search on your credit score

If you’re reading this, you’re clearly aware that hard credit checks impact your credit score. But it might not be clear to you why that is. Here, we’ll explain why that is and what your credit score’s recovery process looks like.

Hard searches cause an initial dip in your credit score

A hard credit check indicates that you're seeking new credit, which could imply a potential change in your financial situation. Credit scoring models factor in this potential risk, often resulting in a small and temporary dip in your credit score. Therefore, when a hard check is first recorded, your credit score might dip slightly. Lenders may view multiple hard checks in a short time as a sign of financial distress.

The dip from a single hard check is usually minor, often just a few points. This impact is typically short-lived, with your score beginning to recover within a few months, assuming no additional risk factors arise.

The impact of a hard credit search will fade over time

Over time, the impact of a hard inquiry diminishes. This reduction occurs because a single hard inquiry becomes less indicative of your current risk as time passes. You can also mitigate the impact of a hard search on your credit file by demonstrating responsible credit behaviours like making timely payments and keeping balances low. This signals to lenders that you’re managing your new credit well, which can help your score recover more quickly.

Applying for credit repeatedly can hurt your credit score more

To minimise the impact that credit applications have on your credit score, space your credit applications. It’s essential to remember that lenders are risk averse. As we mentioned earlier, applying for credit causes a brief dip in your score because it indicates that your financial position could change in the near future. And from a lender’s perspective, it means that your financial position could be less stable. Lenders seek stability over almost everything else, so multiple credit applications could make them suspicious. Here’s why:

It may suggest financial distress: Applying for numerous credit lines in quick succession could indicate that you’re in financial trouble and need credit to get by.
It could indicate a higher risk for debt: Opening several new lines of credit quickly can lead to a situation where you’ve spent much more than you can pay back. This increases your likelihood of missing a payment or defaulting. That’s bad for you, but it’s also poor business for lenders, and they’re likely to reject your application if there are several recent hard searches on your file.

However, you might not need to worry about repeat hard searches depending on the kind of credit you’re applying for. For example, if you’re looking to buy a home and are applying for a mortgage, multiple hard searches in a specific time period (usually about two weeks, but sometimes as long as 45 days) won’t raise alarm bells for most lenders. This is because it’s clear that you’re looking for a good deal and aren’t trying to pull a fast one on the lenders.

How to prepare for and minimise the impact of a hard search

At this point, you understand how long a hard search will stay on your credit report and why your score is impacted by hard searches. So, before we wrap up, let’s cover some of the things you can do to minimise the impact a hard search has on your credit report.

Check your report before applying

Regularly check your credit report and look for discrepancies like incorrect personal details, outdated account information, or inaccuracies in your payment history, which can unfairly lower your score. If you find errors within your credit file, contact the credit bureau and the provider that reported the information to dispute them, or file a notice of correction for past shortcomings.

Checking your own credit is a soft credit search, so don’t worry about it impacting your credit score like a hard search.

Only apply for what you need

Before you apply for a line of credit, make sure it’s aligned with your long-term financial goals. Unnecessary credit lines, like credit cards or personal loans, might gratify you in the short term, but misusing them can lead to long-term debt.

Compare your situation to the lender’s eligibility requirements

Many lenders offer pre-approval checks that only involve a soft inquiry, which doesn't affect your credit score. Because lenders tend to have specific criteria for your income level, employment status, and debt-to-income ratio, pre-approvals can give you an idea of your chances of approval without risking a hard check.

Build your credit score with the Pave app

To manage your financial health, it’s important to understand how a hard search can impact your credit file and your credit score. While hard credit checks can remain on your file for two years, their impact is reduced with time and savvy financial management.

Remember, hard searches have a short-term effect, but your long-term credit health is more significantly influenced by factors like your payment history, credit utilisation ratio, and the length of your credit history.

If you’re planning for a new line of credit, the Pave app can help you prepare your credit score for your application. Pave will help you track your upcoming bills and payments, making it easier to support your credit health and avoid negative marks like missed payments. Plus, with active credit building and personalised learning resources, Pave can help you elevate your credit score.

If you’re ready to join the 100,000+ Brits using Pave to build their credit, download the app today!