Your Credit Score
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What is a credit check?
Learn about the checks lenders usually complete when you apply for credit, including the difference between a soft and hard credit check.
Why do lenders complete credit checks?
Lenders complete credit checks to help them measure the risk of offering credit, and the likelihood of it being paid back, based on your past financial history. Other companies might also complete checks before offering services to you.
Depending on the type of borrowing, the lowest and longest lasting interest rates are usually offered to low risk applicants, who’ve shown they can manage credit well over time.
Your credit score can also affect the amount of credit you’re offered.
What does a credit check look for?
Credit reference agencies collect information from lots of sources, including:
- The electoral register – being on the electoral roll is one way that your identity and home address can be confirmed, which could help to improve your credit eligibility.
- Court records – Defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy might affect your credit score for up to six years.
- Lenders and other service providers – details about the types of accounts you have, how well they’re managed, your existing debt and the total amount of credit available to you, could all affect your credit score and eligibility.
How does a credit check affect your credit score?
It really depends on the type of credit check that’s been completed.
Hard credit checks and your credit score
A hard credit check will be visible to anyone checking your credit report, and can impact your credit score for at least 12 months, which could affect your ability to get credit in the short-term.
A number of hard credit searches in a short period could suggest you’re having financial difficulties, potentially influencing the way you’re viewed by lenders and other service providers.
Soft credit checks and your credit score
Although they might be visible on your credit report, soft credit searches won’t affect your credit score, or your ability to get credit in future, so you don’t need to worry about how often they’re completed.
It’s just useful to know that soft credit checks or quotations aren’t offered on all types of credit, so make sure you’re aware what type of checks will be completed before you go ahead.
What else do lenders check?
A summary on credit checks
Credit checks are completed to measure the risk of lending or doing business with you.
- Checks are completed by lenders, utility companies and other service providers, letting agencies, landlords and even some employers.
- Things like your borrowing history, court records and even being on the electoral register, can all affect your credit score.
- A hard credit search involves a review or your credit record, which may affect your credit score and eligibility.
- A soft credit check just provides a view of your credit eligibility, which won’t affect your credit score or ability to get credit.