April 11, 2025

What Do You Mean By Credit Check?

By : Ellie Brown

When you apply for a loan or seek a rental, the authority will conduct a credit check. The direct lender or the landlord probably reviews your financial management through a detailed credit screening. For this, they check your credit report, which they receive from top credit agencies like Experian.

Your credit report reveals debts, income, bills you pay, employment history, residential address, and income. It helps the authority gauge the reliability and affordability of your repaying the dues promptly. In the case of the landlord, he analyses your past payments. It helps him understand whether you can pay the rent on time without skipping anything. The blog discusses what a credit check is and why it is important.

How would you define a credit check?

A credit check is a process that defines how well you handle your finances. These assessments are carried out by lenders, brokers, banks, building societies, or landlords. One may even face it when getting a mobile connection, cable, and a good job.

The detailed assessment reveals your income against the debts and monthly payments. It may also reveal the financial links (if any) you have with someone. It reveals aspects like CCJ, bankruptcies, loan defaults, or IVAs impacting the credit score. You may struggle to get a rental, loan, or a good job in low credit score conditions.

What type of credit assessment can you expect?

A credit check helps the authority and the person know the affordability and the right financial products. Usually, there are two types of credit checks: soft and hard credit checks. Every loan or credit card provider conducts a soft credit check. It is a basic process that you cannot skip. Here is the detailed difference between the two:

 

Soft credit check	Hard credit check
It is a basic and mandatory credit search that’s usually done to evaluate your affordability and eligibility for a loan, credit card, or job.	Loan providers may conduct detailed credit research once you approve the basic quote. It is the next step to proceed further with the application.
Aspects like soft credit checks show basic details like employment history, income, name, address, and contact details. The creditor would not be able to see your past debts and other loan applications.	Hard credit checks show details like- current income, employment history, bills and payments, and the debt you owe alongside basic details. As the authority may check past debts, your credit score may be affected temporarily.
You can benefit from a soft credit check if: ü  You want to know the approximate loan cost without affecting the credit score ü  Get a basic home or car insurance quote ü  You want to know your credit score ü  Get a quick loan without detailed credit analysis	You may benefit from a hard credit check if: ü  If you need to proceed with the loan application and completion ü  You want to open a new bank account, buy a sofa, car, etc. ü  You want a new mobile connection, to update your electricity connection, or to boost your credit rating.

 

Can you run a credit check on someone without their permission in the UK?

No company or loan provider can conduct credit checks without permission. Conducting hard credit checks without your permission is not permitted. This is because the process affects credit rating for at least 12 months. It gets recorded on your credit report.

According to Experian, “You can expect a hard credit check to drop your credit score by 5 points or less.” Analyse the initial agreement and quote carefully. Provide your consent only if you find the loan or the deal affordable.

Why do loan providers conduct a credit check?

When you approach loan providers for any loan like car loans, they conduct a basic credit check.  Here are the reasons for conducting one:

Is it possible to get a loan or rent a house without a credit check?

Credit checks are an essential part of financial facilities. It helps the authority analyse your loan or rental agreement affordability. You may struggle financially if you get an agreement without basic checks. It is because you may borrow more or choose a higher rent you cannot afford. Thus, it may lead to severe circumstances like bankruptcy and legal orders.

 You must avoid dealing with firms that skip one and offer guaranteed loans immediately. It reveals a sign of complete fraud.  

Instead, prefer one that conducts a basic credit check that does not affect credit score. It is also known as a loan with no credit check facility.  The initial check does not impact your credit score. However, missing a payment may lead to additional interest and penalties. Therefore, move ahead only if you can afford the instalments.

What do landlords see on credit checks in the UK marketplace?

Landlords and house-letting agents can only conduct a soft credit check in the UK. It does not affect your credit rating. A landlord can only analyse the easily available or the basic details your initial profile reveals. Here is what they can analyse during the basic check:

1. Name and residential address

They check the name and current residential address before providing the rental agreement. It helps them analyse the duration of your previous rental agreements. How long have you lived in a particular place? The longer the rental history, the better.

2. Electoral Roll status

The Electoral Roll defines your identity as a citizen of the country. It reveals your right to vote living in the UK for at least 3 years. You may get the rental if you have an updated one with the recent home address, contact number, and email.

3. Outstanding County Court Judgements

County Court Judgements are court orders to repay the loan provider’s due. The creditor may launch one against you if you fail to repay the dues within time. The high number of CCJs may affect your rental agreement applications. You may struggle to get a good apartment to rent.

Can you reduce the impact of hard credit checks?

You cannot remove hard credit checks from your credit report. However, you can reduce the impact of hard credit checks on your financial profile. It will help you repair your credit rating and qualify for better rates.  Here is how you can do that:

1) Ensure 30-90 days’ gap between applications

Hard credit checks affect your credit score drastically. One must ensure financial discipline and reduce unnecessary expenses. It may mean ensuring sufficient gaps between applications. It grants space for the credit to breathe and improve.

2) Avoid multiple applications at once

Apart from ensuring gaps, don’t apply for a loan or credit card with multiple applications at once. It reveals your casual behaviour towards finances. You may face rejection on a loan or credit card immediately. Instead, check the credit score requirements and pre-qualify. It does not impact the credit rating. Choose the one that meets your affordability, eligibility, and budget parameters.

3) Consolidate your debts

Keeping the debt count low should be the prime concern to reduce the harsh impact. Check the best ways to pay multiple debts at once. It helps you save interest costs and boost your credit score immediately. One of the best ways to do that is by consolidating debts. It helps merge different debts into a single payment. You can try this with the costliest debts like- credit cards, payday loans, etc.

However, getting a direct loan from a mainstream provider may be challenging. It is due to the low credit score. Don’t worry, check affordable bad credit loans for the purpose. It increases your chance of qualifying for the loan. You can get a quote and pay according to the agreement terms. Move ahead with the application only if it indeed reduces the monthly payments.

Bottom line

Credit checks involve basic and detailed screening of personal finances before leveraging any financial facility. It helps the borrower and the authority analyse the person’s affordability. Getting a loan or a credit card is a legal and mandatory process. You may also encounter one during the rental agreement, employment, or getting new mobile connections. Understand the impact of hard and soft credit checks before tapping any financial product.