A credit check is what happens when someone checks your credit report to get an idea of your creditworthiness. But did you know there are different types of credit check for different things?
Here's what you need to know about the two main types of credit check.
These happen when lenders perform a full credit check at the point of lending. They'll have full visibility of everything on your credit file, and leave a 'footprint' - meaning other checks in the future will see a record of this one. Too many hard credit checks will harm your credit score.
Lenders typically run hard credit checks for things like mortgages, mobile phone applications, loans, credit cards and car finances.
A relatively recent development, these only give an indication of your chances of getting credit. But the big advantage is they leave no footprint, saving you from piling up hard checks on your credit file if you're shopping around.
Most comparison sites use a soft search to check the whole market at once. They send your details to one or more third parties who compare your soft search results against people who have successfully borrowed from various lenders. Your chances of being accepted are usually given as a percentage or a mark out of ten. Some lenders will even pre-approve you based on this soft search.
Once you decide to apply, your chosen lender will run a hard credit check.
To protect your credit history, always try and use a soft credit check before making your final applications. A hard credit check could negatively affect your credit file.
Your guide to navigating the financial system, providing helpful tips along the way and helping you to enjoy a happier, healthier relationship with money.Find out more
Checking your credit reports
When it comes to your financial health, your credit score is really important. So checking your credit reports is a good place to start when seeking to improve your financial health.
Making yourself visible to the system
If you haven't managed to find your credit report, you might be 'invisible' to the system for some reason, meaning one or more CRA can't find you.