Credit Check
Credit Check refers to the process where a lender, business, or individual reviews your credit report or credit score to assess your creditworthiness, typically as part of an application for credit, housing, employment, or other services. This is evaluated within New Credit & Inquiries.
Plain-Language Meaning
A credit check is when someone looks at your credit history or score to evaluate how reliably you have managed debt and financial obligations in the past.
Practical Example
If you apply for a new credit card, the issuer will perform a credit check to see your credit history and score before deciding whether to approve your application.
What It Does Not Mean
A credit check does not mean automatic approval or denial of credit, nor does it always result in a change to your credit score; it is simply a review of your credit information.
How the System Uses It
The system uses credit checks to help lenders and other entities determine the level of risk involved in extending credit or services to an individual. The type of credit check—hard or soft inquiry—can affect whether the check impacts your credit score.
Common Misconceptions
- “Every credit check lowers your credit score.” Only hard inquiries may have a small, temporary impact on your score; soft inquiries do not affect your score.
- “Credit checks are only done when applying for loans.” Credit checks can also occur for rental applications, employment screening, insurance, and other purposes.
- “You can’t see who has checked your credit.” Credit reports list all recent inquiries, so you can review who has accessed your credit information.
Related Pages
Related Glossary Terms
FAQ
- Does a credit check always affect my credit score? No, only hard inquiries—typically from applications for new credit—may impact your score, while soft inquiries do not.
- Can I find out who performed a credit check on me? Yes, your credit report includes a section listing all recent credit inquiries, showing who accessed your credit information.