What is a Credit Check?

What is a Credit Check?

A credit check, which is sometimes referred to as a ‘credit search’, is a when a company looks at your credit report to find information about your credit history and to truly understand your financial behaviour. A company doesn’t necessarily have to ask for your consent before doing a credit check, however, they do need to have a good reason for doing one, this could be when you are applying for a loan, applying for a phone contract and especially when you are applying for a mortgage.

What is included on your check

A credit check includes details all about your financial stability, this includes whether you have any direct debits, if you have paid any loans back on time or if you have failed to be able to pay back any loans or debts. Credit checks also look at any accounts you may have in conjunction with other people, such as a joint account with a spouse or a mortgage. If you’re unsure about your credit score, there are ways you can improve this.

Credit checks also check how much credit you currently have and how you go about spending this.

Different types of credit checks

When it comes to credit checks it is important to know that there are in fact 2 different types of credit checks – a soft check and a hard check:

Soft Credit Check

A soft credit check is an initial look at your credit score. This includes basic information in which companies can check about your finances. These type of checks identify how successful you will be for a hard check. This type of check is not visible to other companies, so this will have no effect on your credit score.

Examples of soft credit checks:

  • You search for your own credit score
  • A company searches for your credit score as part of an identity check

 

Hard Credit Check

A hard credit check happens when a company chooses to complete a full search of your financial history. Each credit check is reported, so will be visible on any future checks. If you complete too many hard checks over a short period of time, this can affect you for around 6 months and will reduce your chances of getting approved for credit in the future.

Examples of hard credit checks:

  • You apply for a monthly phone payment
  • You apply to a utility company
  • You apply for a loan or a mortgage

 

Tenant Referencing Checks:

As you can see credit checks are important as they truly show your financial situation, so make sure you are always on top of your credit. Our tenant referencing check makes sure that you know if the potential tenant will be able to afford their rent payments, we check whether they are currently employed, as well as checking any previous employment details. Our tenant referencing check also looks at their credit and potential fraud, this will show any alarming facts that you may need to know about the tenant. We even check into their previous landlords to check if they had any missed payments and if they caused any maintenance issues.

Contact Us

At Van Mildert, we are always on standby to perform any potential tenant referencing checks. If you are wanting any more information on tenant referencing or would like to discuss credit checks in more detail, don’t hesitate to contact us on 0191 256 0920 or email us at sales@vanmildert.net.