What are credit checks or credit searches?

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Credit checks can be confusing (sometimes they’re even called credit searches – which only adds to the confusion). We’ve outlined what a credit check actually is, the different types you’ll find and when you might need one. 

What is a credit check?

A credit check happens when a lender you’re asking to borrow money from wants to see how likely you are to repay them. Lenders will usually have an agreement with a few credit reference agencies (CRAs). CRAs gather lots of information about you from banks and lenders you’ve used or are using. They might also look at public sources to see if you’ve got any court judgements. 

When you apply for credit like a loan or a mortgage, lenders will ask a CRA for information about you to help them make their decision. One thing they might look at are credit scores, which come from Credit Reference Agencies (CRAs). There are three main CRAs: TransUnion, Experian and Equifax.

This is known as a “credit check” or “credit search”. Credit checks show how you’ve behaved in the past when you borrowed money, like if you’ve missed any payments. This can be money you’ve borrowed on something like a credit card, an overdraft or even a phone contract. 

Read more about how to improve your credit score here.

There are 2 types of credit check: A soft credit check and a hard credit check 

A soft credit check

A soft credit check happens when you’re checking your credit score, but you’re not asking for any credit. Doing a soft credit check doesn’t affect your score. Checking your credit score is what’s called a ‘soft search’. 

You can check your credit report and score as much as you like. It won’t damage your chances of getting credit. 

Find out how you can check your credit score here.

A hard credit check

A hard credit check usually happens whenever you apply for credit like a mortgage or credit card. It’s called a ‘credit search’ or ‘credit check’. It’ll leave a mark on your report and it could  temporarily lower your score. If you have lots of hard credit checks at once, lenders might think you could be over-reliant on credit. To avoid this, you could space out applications for credit rather than applying for lots at the same time.

Among other things, a lender will use information about how you’ve borrowed in the past and if you’ve used other types of credit to help them decide if they should give you credit.

A hard credit check might be carried out when you apply for a:

  • overdraft, loan or credit card

  • rented apartment or mortgage

  • monthly phone contract

  • utility company, like your water or energy provider

It’s useful to check your credit score and credit report 

Checking your credit score can tell you what your borrowing health is like and how you might look to potential lenders. It can also help show you if your credit score is improving. Read more about how to improve your credit score here. 

Taking a look at your credit report can help you see why your score may have changed and understand why you may have been turned down for credit. You’ll be able to see what lenders may find when deciding whether to approve you and spot any errors that may damage your chances of getting credit.

Soon, you’ll be able to check your credit score in Monzo!

How can you see who’s checked your credit report?

Every time a lender makes a credit check, it’ll leave an inquiry on your credit report. You’ll be able to see who made a credit check when you check your credit score. You’ll soon be able to check your credit score in Monzo, but to see who has made a credit check, you’ll have to check your full credit report.