Soft Searches vs Hard Searches
When a broker runs an eligibility check before you formally apply, they typically use a soft search. A soft search is visible only to you on your credit report — it does not appear to other lenders and has no impact on your credit score whatsoever. Brokers use soft searches to identify which lenders are likely to accept you before submitting a formal application, which protects your score during the research phase.
A hard search is recorded by the credit reference agency and is visible to any lender who checks your file for up to two years. It can reduce your score by a small number of points — typically five to ten — and a cluster of hard searches in a short period can signal financial stress to lenders. The hard search occurs when you submit a full application and the lender conducts a formal credit check.
To minimise the number of hard searches, always use a whole-of-market broker who pre-qualifies you with soft searches before committing to a formal application. Making multiple direct applications to different lenders in quick succession can leave several hard search footprints and make you look desperate for credit, even if each individual search is modest.
How the Loan Appears on Your Credit File
Once your secured loan completes, it is registered on your credit file as a secured liability — the same broad category as a mortgage. Credit reference agencies including Experian, Equifax, and TransUnion will show the lender name, the original loan amount, the current outstanding balance, your monthly payment, and your payment history. The entry also confirms the loan is secured against your property.
The addition of a new credit account typically causes a small temporary dip in your score in the first few months, simply because the account is new and has no track record. This is a normal and expected effect. As the account ages and you make regular on-time payments, the score recovers and over time can improve beyond where it started, provided your overall credit profile is managed well.
Lenders assessing future applications — for a mortgage, car finance, or further borrowing — will see the secured loan balance and monthly commitment. They will factor it into their affordability calculations when deciding how much they can lend you. This is not necessarily harmful, but it does reduce your available borrowing headroom.
