The short answer
An initial business loan application through most modern brokers and lenders uses a soft credit search, which does not affect your credit score and cannot be seen by other lenders.
A hard credit search is typically only carried out when you choose to proceed with a specific lender’s offer. At that stage, it is recorded on your credit file and can be seen by other lenders.
Soft credit search vs hard credit search
| Soft search | Hard search | |
|---|---|---|
| Affects credit score? | No | Yes (marginally) |
| Visible to other lenders? | No | Yes |
| When it happens | Initial eligibility/matching | Formal application to a lender |
| Stays on file? | Yes (visible only to you) | Yes (for 12 months) |
Why the distinction matters
If you apply to multiple lenders individually — high street banks, online lenders, comparison sites — each may conduct their own hard credit search at the initial stage. Multiple hard searches in a short period suggest to lenders that you are urgently seeking credit, which can reduce your credit score by 5–30 points per search.
The practical risk: if you are rejected by the first lender, your score has already been affected, making the next application slightly harder.
How Fundably handles credit searches
Fundably’s initial application and matching process uses a soft credit check only. This means:
- Your credit score is not affected when you apply
- Other lenders cannot see that you applied
- You can explore funding options without risk
A hard credit check is only triggered when you choose to formally proceed with a specific lender’s offer — at which point you will be informed this is happening before you confirm.
Does a business loan affect your personal credit score?
For most SME business loans, lenders will check both the business credit score (if one exists) and the personal credit score of the business owner or director.
This is particularly common for:
- Unsecured business loans
- Shorter-term loans
- Loans to younger businesses with limited trading history
For incorporated businesses with strong trading history and good accounts, some lenders focus on business metrics and may not require a personal credit check. However, this is not the norm for most SME loans in the UK.
How to apply without hurting your credit score
- Apply through a multi-lender broker that uses soft searches at the matching stage (like Fundably)
- Compare offers from multiple lenders returned by the broker — without a hard search per lender
- Proceed with one lender — accept the best offer, triggering one hard search rather than many
This approach is substantially better for your credit score than applying individually to multiple lenders.
Apply through Fundably — soft search only, no credit score impact from matching.