Credit checks are a necessary step for all types of credit applications including loans, car finance and home tenancy agreements. But for those who are already concerned about their credit rating, there is an understandable worry that the check itself might do damage to your score.
In this post, we’ll clear things up when it comes to credit checks and how they affect your score in the UK.
What is a credit check?
In short, credit checks are a way of checking your history, behaviour and associations when it comes to credit. They look at:
- What credit you’ve taken out
- Whether it’s been paid back
- When it’s paid back (on time and regularly or late and irregularly)
- Financial associations – including people with whom you share joint bank accounts or mortgages
Aside from checking your credit score online, credit checks can be broken down into soft and hard credit checks, which refer to the level of detail being assessed.
As the name suggests, soft credit checks take a brief look at your credit report to get an idea of your behaviour. These are typically an initial step in the application process to get a better idea of whether you’ll be successful.
On the other hand, hard credit checks are a comprehensive assessment of your credit history. These will typically be performed later in the process, as a final step to approve your application.
Do they affect your credit score?
Credit checks are one of the many factors that affect your credit score. But it depends on the type of check being done. Soft checks are not visible to other companies, so they won’t affect your credit score going forward. The same is true when checking your credit report yourself.
However, because hard credit checks are only done when companies are considering you for an application, they can have an impact on your score. Hard credit checks will be visible on your report, and too many in a short space of time could reduce your chances of being approved for credit. This is particularly true where your application for credit has been unsuccessful. However, the initial soft credit check should help you avoid this situation.
How we check your credit score
At My Car Credit, we only perform a soft credit check initially, to make sure there’s no impact on your credit score. This gives us a better idea of whether you’ll be successful before proceeding with the application. This in turn enables us to provide poor credit car loans to more people across the UK.
Rates from 6.9% APR. Representative APR 13.9%
Evolution Funding Ltd T/A My Car Credit
Require more help?
Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!