Introduction
A soft credit check, also known as a quotation search, soft inquiry, or soft pull, is a type of credit inquiry that does not affect the applicant’s credit score. While there are various types of soft checks, in the context of NestEgg’s services, these refer specifically to quotation searches. In other words, an applicant can see if they'd be accepted for a loan, and at what rate, before they formally apply using a hard search.
An application using NestEgg's Loan Matching or Broker platform. The slider changes colour according to the likelihood of being accepted:
Information returned
The information returned from a credit quotation search is identical to that of a hard credit check. As a result, NestEgg can assess the application using the same rules that are applied for that specific product. Because of this, the applicant has an accurate indication of how likely they are to be approved and at what rate (if Risk Based Pricing is used).
This process allows applicants to gauge whether applying for the product is worthwhile and estimate how much they may be eligible to borrow.
Benefits of soft credit checks: applicants
From the applicant’s perspective, the benefits of soft credit checks include:
No impact on credit score. Unlike hard inquiries which can reduce credit score by several points, soft credit checks do not reduce a credit score.
Not visible to others. Soft checks are only visible to the applicant. They are not shown in any credit report that might be visible to a lender.
Anonymity. Credit quotation searches maintain anonymity. Applicants do not provide the lender consent to store or use their information beyond providing a quote.
Note: because soft checks are quotation searches, they are not applications. Therefore lenders using NestEgg can see the data for soft credit searches in aggregate, but they cannot see any Personal Identifiable Information linked to individual checks.
Benefits of soft credit checks: lenders
From the lender’s perspective, soft credit checks offer several advantages (and one key disadvantage):
Increased conversion rates: Allowing applicants to check their eligibility without a hard check, means more people, who may be sensitive to their credit score, applying for a loan.
Transparency: Soft checks allow lenders to provide applicants with an accurate indication of their likely application outcome before they formally apply.
GDPR compliance: Since the applicant is not giving consent for their data to be stored or used beyond generating a quotation, there are no concerns regarding data retention or GDPR compliance.
Cost efficiency: Soft credit checks are significantly more cost-effective than hard checks, allowing you to reduce expenses on applicants who would be declined for a loan, as you can advise them of their ineligibility after the soft check.
Using Soft Checks with NestEgg
NestEgg’s Loan Matching solution utilises soft credit checks. Loan Matching enhances the loan application experience by offering:
A colour-coded slider that displays a range of results, from green (likely approval) to amber (borderline) to red (decline), helping applicants understand their loan prospects easily.
Easy configuration: Lenders can choose which type of credit checks is used and when.
Flexibility and speed: Lenders using NestEgg’s decision engine can bring products to market in minutes. They can adjust membership criteria, create or edit loan products, and update application questions with a few clicks, with changes instantly applied.
Product configuration selecting whether to use a soft credit check (Dashboard 2.0):
By integrating soft credit checks, Loan Matching and NestEgg ensure a borrower-friendly, cost-efficient lending process, enhancing customer satisfaction and profitability for lenders.
Soft checks are also available via the API.