What is a credit check?

You may have heard the phrase “credit check” before, but what does this mean exactly?

A credit check is when a company like a credit card provider or mortgage lender looks at information from your credit report to understand your financial behaviour. Other companies like phone providers and utility suppliers may also perform a credit check. A credit check usually happens to ensure you can pay your loans or bills on time.

When you apply to borrow money – such as a loan, mortgage or credit card - the lender runs a credit check to see if you’re eligible for their product.

They look at your credit report, which includes details like your address; the amount owed on your mortgage, overdraft and any credit cards; and details of anyone you’re linked to financially. It also shows if you’ve had financial difficulties in the past, like a default registered against you, a County Court judgement (CCJ) or if you’ve declared bankruptcy.

This information is used to build up a picture of how you manage your finances and helps a lender to ascertain if you can afford their product. The credit check will help to determine whether your application for a credit card, loan or other credit product is successful and what interest rate and credit limit you can be offered.

A hard credit check is when a company makes a complete search of your credit report. This could happen when you’re applying for, say, a credit card, or a new mobile phone contract. A hard credit check can also be called a full credit check or a hard search.

Each hard search is then recorded on your report, known as a “footprint”. These footprints can be seen by any companies that search your credit report in future. In other words, any company performing a check will be able to see that you’ve previously applied for credit.

A footprint from a hard search usually remains on your credit report for at least 12 months. These footprints may influence whether a financial provider decides to lend money to you. For example, if lots of hard credit check footprints are left in a short space of time, lenders might think you’re desperate for credit and therefore be less likely to lend to you.

Before you can be approved for credit, a hard credit check will be completed by the lender. This could affect your credit rating, especially if done frequently.

Making multiple credit applications could make lenders think you’re in financial trouble and that you’re a higher-risk borrower. Credit agency Experian also claims multiple hard checks in a short period of time can negatively impact your credit score.

A high credit score means lenders are more likely to accept your application, while a low credit score means you may struggle to get accepted for the best deals.

A soft credit check happens when you check your own credit report, or when a lender does an initial look to see whether you’re eligible for certain products and interest rates.

Soft searches can leave a footprint on your credit file, however it is not visible to other lenders. This means they have no impact on your credit score. Only you can see the soft searches on your report, however companies may ask to see it as it is full of important information about the customer.

A soft check is a useful way to check how likely you are to be accepted for credit, whether it’s a loan to pay for a new car or a credit card to earn rewards and use for everyday purchases. You can check if you’re eligible for the Partnership Credit Card before applying – we perform a soft search so there is no impact to your credit score.

Credit subject to status. 18s and over. UK residents. T&Cs apply. John Lewis plc is a credit broker and not a lender.

When thinking about what a credit check is, the most important point is arguably the difference between a soft search and a hard search.

Generally, a soft search is where a lender just wants a top-level view of your financial history so they can pre-screen you for offers you could be eligible for. A hard search is a much more thorough look at your credit report.

Like a footprint in the sand, a soft credit check disappears and is invisible to other companies. A hard credit check can be seen by other companies, potentially harming your credit score especially if multiple searches are completed in a short amount of time.

If you’re interested in applying for the Partnership Credit Card we’ll perform a soft search to check your eligibility. This means it won’t impact your credit score.

Credit subject to status. 18s and over. UK residents. T&Cs apply. John Lewis plc is a credit broker and not a lender.

Content correct at time of writing 03/08/23. 

John Lewis Money is not responsible for content contained on external websites. This article is for promotional or information purposes only. You must not rely on it as advice. Please contact a financial adviser if you need advice before you buy a financial product or service.